CMA Intermediate · Cost Accounting · Employee Costs
Ramesh Industries pays a worker Rs 80 per hour for a normal 40-hour week. In one week he works 46 hours. Overtime hours are paid at double the normal rate. The overtime is due to a customer's urgent order. Total wages for the week are:
Total wages are Rs 4,160. Normal wages are 40 hours at Rs 80, giving Rs 3,200, and the 6 overtime hours at double rate Rs 160 give Rs 960. Adding the two gives Rs 4,160 for the week.
- ARs 3,680
- BRs 3,200
- CRs 4,160Correct
- DRs 4,640
Explanation
Normal wages = 40 x 80 = 3,200. Overtime = 6 x 160 = 960. Total = 4,160. Rs 3,680 is 46 x 80, ignoring the premium. Rs 4,640 wrongly pays all 6 hours at 160 plus 40 x 80 and adds an extra premium.
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