The management of a company wants to formulate an incentive plan for the workers with a view to increase productivity. The following particulars…
CA Intermediate · Cost and Management Accounting · MTP · January 2025
The management of a company wants to formulate an incentive plan for the workers with a view to increase productivity. The following particulars have been extracted from the books of company: Piece Wage rate 10Weekly working hours 40Hourly wages rate 40 (guaranteed)Standard/normal time per unit 15 minutes. Actual output for a week: Worker A: 176 piecesWorker B: 140 pieces Under Halsey scheme, worker gets a bonus equal to 50% of Wages of time saved. CALCULATE earning of workers under Halsey's and Rowan's premium scheme.
Suggested Answer and Working Notes:
Calculation of earnings for workers under different incentive plans: Halsey's Premium Plan: Worker – A Worker – B Actual time taken 40 hours 40 hours Standard time for actual Production 44 hours (176 Pcs×15 Min. / 60 Min.) 35 hours (140 Pcs×15 Min. / 60 Min.) Minimum Wages 1,600 (40 hours x 40) 1,600 (40 hours x 40) Bonus 80 {50% (44-40) x 40} No bonus Earning 1,680 1,600 Rowan's Premium Plan: Worker – A Worker – B Minimum Wages (as above) 1,600 1,600 Bonus 145.45 (4 hours / 44 hours × 40 hours × ₹ 40) No bonus Earning 1,745.45 1,600
Topics: Employee Cost & Direct Expenses
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