CA Intermediate · Cost and Management Accounting · Employee Cost and Direct Expenses
Gupta Engineering follows the Rowan plan. Standard time for a job is 20 hours, actual time taken is 16 hours, and the hourly rate is Rs. 80. What is the total wages for the job?
Total wages are Rs. 1,536. Time wages are 16 hours at Rs. 80, or Rs. 1,280. The Rowan bonus is time saved over standard time (4/20) multiplied by time wages, giving Rs. 256. The sum of the two is Rs. 1,536.
- ARs. 1,280
- BRs. 1,536Correct
- CRs. 1,600
- DRs. 1,408
Explanation
Time wages = 16 x 80 = Rs. 1,280. Rowan bonus = (time saved / standard time) x time taken x rate = (4/20) x 16 x 80 = Rs. 256. Total = 1,280 + 256 = Rs. 1,536. Rs. 1,408 results from wrongly using a 50% share of the time saved, which is the Halsey method.
Did you get it right without looking?
One question tells you little. A timed set on Employee Cost and Direct Expenses shows your real accuracy, how long you take and where you lose marks.
More Employee Cost and Direct Expenses questions
- In a factory, the time spent by workers because of a power failure, for which they are paid wages but no production takes place, is called i…
- Aarav Constructions engaged a specialist contractor for a special fabrication on Job 22. The cost of a drawing design prepared by an externa…
- Mehta Textiles employs 400 workers on average during the year. During the year 28 workers left and 12 were replaced; in addition 20 new work…
- Under the Rowan plan, a worker at Sundaram Engineering has a time allowed of 20 hours, takes 15 hours, and earns Rs 60 per hour. What is the…
- Under the Halsey premium plan, a worker at Pune Tools is paid Rs 50 per hour. The time allowed for a job is 40 hours and the worker complete…
- In a factory, the cost of idle time arising from a normal power failure of 2 hours per month is treated in cost accounting as follows: