The following are the emoluments and benefits received by Mr. A, an employee of XYZ Co.: Particulars Basic pay 9,000 p.m. Dearness allowance 1,800…
CA Intermediate · Cost and Management Accounting · MTP · September 2025
The following are the emoluments and benefits received by Mr. A, an employee of XYZ Co.: Particulars Basic pay 9,000 p.m. Dearness allowance 1,800 p.m. Bonus 20% of salary and D.A. Other allowances 2,250 p.m. Employer's contribution to P.F. 10% of salary and D.A. Out of the total 2,160 annual working hours of Mr. A, 360 hours are classified as non-productive and are treated as normal idle time. You are required to COMPUTE the effective hourly cost of employee 'A'.
Suggested Answer and Working Notes:
Statement showing computation of effective hourly cost of employee 'A' Particulars Per month (₹) Per annum (₹) (A) Earning of Employee 'A': Basic pay 9,000 1,08,000 Dearness Allowance 1,800 21,600 Bonus (20% of 1,08,000 + 21,600) 2,160 25,920 Employer's contribution to P.F. (10% of 1,08,000 + 21,600) 1,080 12,960 Other allowances 2,250 27,000 16,290 1,95,480 (B) Effective working hours (refer working) 1,800 hours (C) Effective hourly cost {(A) ÷ (B)} 108.60 Working: Calculation of effective working hours = Annual working hours - Normal idle time = 2,160 hours – 360 hours = 1,800 hours
Topics: Employee Cost & Direct Expenses
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