UGC NET COMMERCE January 2017(Paper-II) Q9
0. Which one of the following statements is true about standard labour time?
- A
Standard labour time indicates the time in hours needed for a specific process.
- B
It is standardized on the basis of past experience.
- C
In fixing standard time due allowance should not be given to fatigue and tool setting.
- D
The Production Manager does not provide any input in setting the labour time standards.
- Option : A
- Explanation : Standard Cost for Direct Labour : The labour engaged in the manufacture of a product is known as direct labour. The wages paid to such workers can be known as direct wages. If the wages paid to workers cannot be directly assigned to a particular product, these will be known as indirect wages. The time required for producing a product should be ascertained and labour should be properly graded. Different grades of workers will be paid different rates of wages. The setting of standards for direct labour cost will involve: (1) Standard labour time and (2) Labour rate standard.
Standard labour time indicates the time taken by different categories of workers for performing a particular job. The method for determining direct labour cost will be different for different jobs but general principles can be followed for arriving at this cost.
The labour rate standard refers to the expected wage rates to be paid for different categories of workers past wage rates and demand supply principle may not be safe guide for determining standard labour rates. The anticipation of expected changes in labour rates will be an essential factor. In case there is an agreement with workers for payment of wage rates in the coming period then these rates should be used.
If a premium or bonus scheme is in operation then anticipated extra payment should also be included. Where piece rate system is used then standard cost will be fixed per piece. The object of fixing standard labour time and labour rate is to derive maximum efficiency in the use of labour.
