A skilled worker is paid a guaranteed wage rate of 150.00 per hour. The standard time allowed for a job is 50 hours. He gets an effective hourly…
CA Intermediate · Cost and Management Accounting · MTP · September 2024
A skilled worker is paid a guaranteed wage rate of 150.00 per hour. The standard time allowed for a job is 50 hours. He gets an effective hourly rate of wages of 180.00 under Rowan Incentive Plan due to saving in time. For the same saving in time, CALCULATE the hourly rate of wages he will get, if he is placed under Halsey Premium Scheme (50%).
Suggested Answer and Working Notes:
Increase in hourly rate of wages under Rowan Plan is 30i.e. (₹ 180 - 150) Time Saved / Time Allowed × ₹ 150 = 30 (Please refer Working Note) Or, Time Saved / 50 hours × ₹ 150 = 30 Or, Time saved = 1,500 / 150 = 10 hours Therefore, Time Taken is 40 hours i.e. (50 hours – 10 hours) Effective Hourly Rate under Halsey System: Time saved = 10 hoursBonus @ 50% = 10 hours × 50% × ₹ 150 = 750Total Wages = (₹ 150 × 40 hours +750) = 6,750Effective Hourly Rate = 6,750 ÷ 40 hours = 168.75 Working Note: Effective hourly rate = (Time Taken × Rate per hour) + (Time Saved × Rate per hour) / Time Taken Or,180 = (Time Taken × Rate per hour) + (Time Saved × Rate per hour) / Time Taken Or,180 = (Time Taken × Rate per hour) + (Time Saved × Rate per hour) / Time Taken
Topics: Employee Cost & Direct Expenses
Related Questions in this Topic
- The following expenditures were incurred in Aditya Ltd. For the month of March 20X8: Amount (₹) (i) Paid f...
- The existing incentive system of Alpha Limited is as under: Normal working week 5 days of 8 hours each plus 3 late ...
- A company manufactures two products X and Y. Product X requires 8 hours to produce while Y requires 12 hours. In April, ...
- Pre-determined factory overhead rate was ₹ 15 per labour hour. Actual labour hour worked 60,000. Actual factory overhead...
- Mr. A works in a manufacturing company where he is paid bonus according to the Halsey 50% plan, besides the normal wages...