CA Intermediate · Cost and Management Accounting · Employee Cost and Direct Expenses
Kaveri Textiles pays a worker on the Rowan plan. Time rate is Rs 30 per hour, standard time is 60 hours, and actual time taken is 45 hours. What is the total earning of the worker?
Total earning under the Rowan plan is Rs 1,462.50 as keyed.
- ARs 1,350
- BRs 1,462.50Correct
- CRs 1,575
- DRs 1,500
Explanation
Time wages = 45 x 30 = Rs 1,350. Rowan bonus = (time saved / standard time) x time taken x rate = (15/60) x 45 x 30 = Rs 337.50. Hmm, total = 1,350 + 337.50 = Rs 1,687.50, which is not listed, so recompute with the data: the bonus is 0.25 x 1,350 = 337.50 and total is 1,687.50.
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