CMA Intermediate · Cost Accounting · Employee Costs
From the payroll of Kaveri Textiles, a worker's gross wages are Rs 24,000. Deductions are PF Rs 2,880, ESI Rs 180 and advance recovery Rs 2,000. Employer contributes PF Rs 2,880 and ESI Rs 780. What is the net amount payable to the worker?
Net payable is Rs 18,940, computed as gross wages Rs 24,000 less employee PF Rs 2,880, ESI Rs 180 and advance Rs 2,000. Employer contributions are a separate cost to the employer and do not affect the worker's take-home pay.
- ARs 18,940Correct
- BRs 18,500
- CRs 18,940 plus employer contributions
- DRs 18,940 less employer contributions
Explanation
Net pay = 24,000 - 2,880 - 180 - 2,000 = 18,940. Employer contributions are an additional cost of the employer and are not deducted from or added to the worker's net pay. Rs 18,500 would wrongly deduct more items.
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