Tommy HL Ltd. pays the following to a skilled worker engaged in production works. The following are the employee benefits paid to the employee: (a)…
CA Intermediate · Cost and Management Accounting · RTP · January 2026
Tommy HL Ltd. pays the following to a skilled worker engaged in production works. The following are the employee benefits paid to the employee: (a) Basic salary per day 1,000 (b) Dearness allowance (DA) 20% of basic salary (c) House rent allowance 16% of basic salary (d) Transport allowance 50 per day of actual work (e) Overtime Twice the hourly rate (considers basic and DA), only if works more than 9 hours a day otherwise no overtime allowance. If works for more than 9 hours a day then overtime is considered after 8th hours. (f) Work of holiday and Sunday Double of per day basic rate provided works atleast 4 hours. The holiday and Sunday basic is eligible for all allowances and statutory deductions. (h) Earned leave & Casual leave These are paid leave. (h) Employer's contribution to Provident fund 12% of basic and DA (i) Employer's contribution to Pension fund 7% of basic and DA The company normally works 8-hour a day and 26-day in a month. The company provides 30 minutes lunch break in between. During the month of August 2025, Mr. Shyam works for 23 days including 15th August and a Sunday and applied for 3 days of casual leave. On 15th August and Sunday he worked for 5 and 6 hours respectively without lunch break. On 5th and 13th August he worked for 10 and 9 hours respectively. During the month Mr. Shyam worked for 100 hours on Job no. AB100. You are required to CALCULATE: Earnings per dayEffective wages rate per hour of Mr. Shyam.Wages to be charged to Job no. AB100.
Suggested Answer and Working Notes:
Workings Normal working hours in a month = (Daily working hours – lunch break) x no. of days = (8 hours – 0.5 hours) × 26 days = 195 hoursHours worked by Mr. Shyam = No. of normal days worked + Overtime + holiday / Sunday worked = (21 days × 7.5 hours) + (9.5 hours + 8.5 hours) + (5 hours + 6 hours) = 157.5 hours + 18 hours + 11 hours = 186.50 hours. (i) Calculation of earnings per day Particulars Amount (₹) Basic salary (₹ 1,000 × 26 days) 26,000 Dearness allowance (20% of basic salary) 5,200 31,200 House rent allowance (16% of basic salary) 4,160 Employer's contribution to Provident fund (12% × ₹ 31,200) 3,744 Employer's contribution to Pension fund (7% × ₹ 31,200) 2,184 41,288 No. of working days in a month (days) 26 Rate per day 1,588 Transport allowance per day 50 Earnings per day 1,638 (ii) Calculation of effective wage rate per hour of Mr. Shyam: Particulars Amount (₹) Basic salary (₹ 1,000 × 26 days) 26,000 Additional basic salary for Sunday & holiday (₹ 1,000 × 2 days) 2,000 Dearness allowance (20% of basic salary) 5,600 33,600 House rent allowance (16% of basic salary) 4,480 Transport allowance (₹ 50 × 23 days) 1,150 Overtime allowance (₹ 160 × 2 × 2 hours)* 640 Employer's contribution to Provident fund (12% × ₹ 33,600) 4,032 Employer's contribution to Pension fund (7% × ₹ 33,600) 2,352 Total monthly wages 46,254 Hours worked by Mr. Shyam (hours) 186.5 Effective wage rate per hour 248 *(Daily Basic + DA) ÷ 7.5 hours = (1,000+200) ÷ 7.5 = 160 per hour (iii) Calculation of wages to be charged to Job no. AB100 = 248 × 100 hours = 24,800
Topics: Employee Cost & Direct Expenses
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