CA Intermediate · Cost and Management Accounting · Employee Cost and Direct Expenses
Sundaram Fabrics pays its worker under the Halsey premium plan. Time rate is Rs 40 per hour, standard time for a job is 50 hours, and the worker completes it in 40 hours. The worker gets 50% of the time saved as bonus. What is the total wages for the job?
Total wages are Rs 1,800. The worker earns Rs 1,600 for 40 hours at Rs 40, plus a Halsey bonus of half the 10 hours saved, which is 5 hours at Rs 40, or Rs 200.
- ARs 1,600
- BRs 1,800Correct
- CRs 2,000
- DRs 1,700
Explanation
Actual time wages = 40 x 40 = Rs 1,600. Time saved = 50 - 40 = 10 hours. Bonus = 50% x 10 x 40 = Rs 200. Total = Rs 1,800. Rs 2,000 is wrong because it pays for the standard 50 hours without bonus logic, and Rs 1,700 wrongly takes 25% of the time saved.
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
- Which of the following is treated as an idle time cost arising from a normal cause in cost accounting for employees?
- Mehta Plastics has an annual workforce of 400 workers at the start of the year; during the year 30 workers left, 20 were discharged, and 50 …
- 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: