A job can be executed either through workman A or B. A takes 32 hours to complete the job while B finishes it in 30 hours. The standard time to…

CA Intermediate · Cost and Management Accounting · MTP · September 2024
A job can be executed either through workman A or B. A takes 32 hours to complete the job while B finishes it in 30 hours. The standard time to finish the job is 40 hours. The hourly wage rate is same for both the workers. In addition workman A is entitled to receive bonus according to Halsey plan (50%) sharing while B is paid bonus as per Rowan plan. The works overheads are absorbed on the job at 7.50 per labour hour worked. The factory cost of the job comes to 2,200 irrespective of the workman engaged. FIND out the hourly wage rate and cost of raw materials input. Also SHOW cost against each element of cost included in factory cost.

Suggested Answer and Working Notes:

Calculation of: (i) Time saved and wages: Workmen A B Standard time (hrs.) 40 40 Actual time taken (hrs.) 32 30 Time saved (hrs.) 08 10 Wages paid @ ₹ x per hr. (₹) 32 x 30 x (ii) Bonus Plan: Halsey Rowan Time saved (hrs.) 8 10 Bonus (₹) 4 x 7.5x (8 hrs x ₹ x) / 2 (10 hrs x 30hrs x ₹ x) / 40 hrs (iii) Total wages: Workman A: 32x + 4x = 36 x Workman B: 30x + 7.5x = 37.5x Statement of factory cost of the job Workmen A B Particulars ₹ Material cost (assumed) y y Wages (shown above) 36 x 37.5x Works overhead 240 225 Factory cost (given) 2,200 2,200 The above relations can be written as follows: 36 x + y + 240 = 2,200 (i) 37.5x + y + 225 = 2,200 (ii) Subtracting (i) from (ii) we get 1.5x – 15 = 0 or 1.5 x = 15 or x = 10 per hour On substituting the value of x in (i) we get y = 1,600 Hence the wage rate per hour is 10and the cost of raw material is 1,600 on the job.

Topics: Employee Cost & Direct Expenses

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic