The following information relates to two workers - Ajoy and Bijoy who are engaged in producing the same product by using the same material: Time…
CA Intermediate · Cost and Management Accounting · PYQS · September 2025
The following information relates to two workers - Ajoy and Bijoy who are engaged in producing the same product by using the same material: Time allowed to make the product: 40 hours Actual time taken to complete the product: 32 hours by Ajoy 30 hours by Bijoy Normal Wage Rate: Same for both Bonus payment plan: Halsey 50% plan for Ajoy Rowan plan for Bijoy Factory overhead recovered: @360 per hour for actual time taken by each worker. Factory cost for the product for each worker: 1,24,800 Ajoy 1,24,800 Bijoy Required: (i) Compute the normal hourly wage rate. (ii) Compute the cost of material used.
Suggested Answer and Working Notes:
(a) Step 1: Let X be the cost of material and Y be the normal rate of wages per hour. Step 2: Factory Cost of Worker 'Ajoy' (₹) A. Material Cost X B. Wages (Halsey Plan) 32 Y C. Bonus = 50% of (SH - AH) × R = 50% of (40 - 32) × R 4 Y D. Overheads (32 hours × 360 per hour) 11,520 E. Factory Cost 1,24,800 Or X + 36 Y = 1,24,800 (Given) - 11,520 = 1,13,280............equation (i) Step 3: Factory Cost of Worker 'Bijoy' (₹) A. Material Cost X B. Wages (Rowan Plan) 30 Y C. Bonus = (30/40) × (40 - 30) x Y 7.5 Y D. Overheads (30 hours × 360 per hour) 10,800 E. Factory Cost 1,24,800 Or X + 37.5 Y = 1,24,800 (Given) - 10,800 = 1,14,000.........equation (ii) Step 4: Subtracting equation (i) from equation (ii) 1.5Y = 720 Y = 480 per hour (a) The normal rate of wages:480 per hour (b) The cost of material: X + 36 × ₹ 480 = 1,13,280 Or X = 1,13,280 - 17,280 = 96,000 Statement of the Factory Cost of the product made by the two workers 'Ajoy' (₹) 'Bijoy' (₹) Material cost 96,000 96,000 Direct Wages 15,360 (32 x 480) 14,400 (30 x 480) Bonus 1,920 (4 x 480) 3,600 (7.5 x 480) Factory Overhead 11,520 10,800 Factory Cost 1,24,800 1,24,800
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...