CA Intermediate · Cost and Management Accounting · Employee Cost and Direct Expenses
Meenakshi Textiles pays under Rowan plan. The time rate is Rs 60 per hour, time allowed is 40 hours and time taken is 30 hours. What is the total wages for the job?
Total wages are Rs 2,250. Basic wages are 30 hours at Rs 60, which is Rs 1,800. The Rowan bonus is time saved over time allowed (10/40) times time taken times rate, giving Rs 450. Adding the two gives Rs 2,250.
- ARs 2,250Correct
- BRs 2,100
- CRs 2,400
- DRs 1,800
Explanation
Rowan bonus = (time saved / time allowed) x time taken x rate = (10/40) x 30 x 60 = Rs 450. Wages for time taken = 30 x 60 = Rs 1,800. Total = 1,800 + 450 = Rs 2,250. Rs 2,100 would result from using a Halsey 50% bonus (10 x 60 x 50% = 300).
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