Pi and Qu are part of a manufacturing team that handles multiple jobs within the production process. Detailed description of their respective…
CA Intermediate · Cost and Management Accounting · RTP · May 2025
Pi and Qu are part of a manufacturing team that handles multiple jobs within the production process. Detailed description of their respective monthly wages is provided below: The standard working hours for the month are 210. Overtime is compensated at twice the sum of basic wages and dearness allowance. The employer's contributions to State Insurance and the Provident Fund are equal to the employees' contributions. Employees Pi and Qu were assigned to jobs A, S, and D in the following proportions: Particulars Pi Qu (i) Basic Wages (₹) 12,000 15,000 (ii) Dearness Allowance 50% 50% (iii) Contribution to provident Fund (on basic wages) 10% 10% (iv) Contribution to Employee's State Insurance (on basic wages) 1.75% 1.75% (v) Overtime (Hours) 8 Overtime was done on job S. You are required to CALCULATE the earnings of Pi and Qu and allocate the employee cost to each job A, S, and D.
Suggested Answer and Working Notes:
Statement showing Earnings of Workers Pi and Qu Particulars Pi (₹) Qu (₹) Basic wages 12,000 15,000 Dearness Allowance (50% of Basic Wages) 6,000 7,500 Overtime wages (Refer to Working Note) 1,371 -- Gross wages earned 19,371 22,500 Particulars Pi (₹) Qu (₹) Less: Contribution to Provident fund (1,200) (1,500) Less: Contribution to ESI (210) (263) Net wages earned 17,961 20,737 Statement of Employee Cost: Particulars Pi (₹) Qu (₹) Gross Wages (excluding overtime) 18,000 22,500 Add: Employer's contribution to PF 1,200 1,500 Add: Employer's contribution to ESI 210 263 Gross wages earned 19,410 24,263 Statement Showing Allocation of Wages to Jobs Total Wages (₹) Jobs A (₹) S (₹) D (₹) Worker Pi: Ordinary Wages (3: 3 : 4) 19,410 5,823 5,823 7,764 Overtime 1,371 -- 1,371 -- Worker Qu: Ordinary Wages (3:5:2) 24,263 7,279 12,131 4,853 Total 45,044 13,102 19,325 12,617 Working Note: Over time = 2 x (Basic wage + DA / 210 hours) X 8 hours = 2 x (₹ 18,000 / 210 hours) X 8 hours = 1,371
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...