ACCA Applied Knowledge · Management Accounting · Accounting for material, labour and overheads
Hartley Co pays a group bonus under which the bonus equals 50% of the time saved, valued at the basic rate of $14 per hour. A job has an allowed time of 60 hours and takes 48 hours. The worker's basic pay is for time taken. What is total pay for the job?
Total pay is $756. The worker is paid basic pay for 48 hours taken, which is $672, plus a bonus of half the 12 hours saved valued at $14, which is $84. Adding the two gives $756; paying only the bonus or only the basic pay is incomplete.
- A$672
- B$756Correct
- C$840
- D$84
Explanation
Time saved = 60 - 48 = 12 hours. Bonus = 50% x 12 x $14 = $84. Basic pay = 48 x $14 = $672. Total = $672 + $84 = $756. $672 omits the bonus, $840 pays for allowed hours, and $84 is the bonus alone.
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