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CA Intermediate · Cost and Management Accounting · Employee Cost and Direct Expenses

At Kaveri Engineering, a worker is paid under the Halsey premium plan. The time rate is Rs 80 per hour, the standard time for a job is 50 hours and the worker completes it in 40 hours. The worker gets a bonus of 50% of the time saved. What are the total earnings for the job?

Total earnings are Rs 3,600. The worker is paid Rs 3,200 for 40 hours at Rs 80, plus a Halsey bonus of 50% of the 10 hours saved at Rs 80, which is Rs 400. The sum of these two amounts gives Rs 3,600.

  1. ARs 3,200
  2. BRs 3,600Correct
  3. CRs 3,400
  4. DRs 4,000

Explanation

Time saved = 50 - 40 = 10 hours. Earnings for time taken = 40 x 80 = Rs 3,200. Bonus = 50% x 10 x 80 = Rs 400. Total = Rs 3,600. Rs 3,200 ignores the bonus, and Rs 4,000 would pay full time-rate for all 50 hours.

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