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CA Intermediate · Cost and Management Accounting · Employee Cost and Direct Expenses

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 completes it in 30 hours. The bonus is 50% of time saved, paid at the hourly rate. What is the total earning of the worker for the job?

Total earnings are Rs 1,750. The worker gets Rs 1,500 for 30 hours actually worked, plus a Halsey bonus of 50% of the 10 hours saved at Rs 50 per hour, which is Rs 250. Adding the two gives Rs 1,750.

  1. ARs 1,500
  2. BRs 1,750Correct
  3. CRs 2,000
  4. DRs 1,875

Explanation

Time saved = 40 - 30 = 10 hours. Wages for time taken = 30 x 50 = Rs 1,500. Bonus = 50% x 10 x 50 = Rs 250. Total = Rs 1,750. Rs 1,500 omits the bonus; Rs 2,000 pays full time-allowed wages, which is the Rowan/time-rate-guaranteed error.

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