CA Intermediate · Cost and Management Accounting · Employee Cost and Direct Expenses
Under the Rowan plan, a worker at Sundaram Tools has a time allowed of 40 hours and takes 30 hours, at ₹80 per hour. What is the total earning for the job?
Total earning is ₹3,000. Time-taken wages are 30 hours at ₹80, which is ₹2,400. The Rowan bonus is time saved over time allowed, 10/40, multiplied by time taken wages of ₹2,400, giving ₹600. Total is ₹3,000.
- A₹2,400
- B₹2,800Correct
- C₹3,000
- D₹3,200
Explanation
Wages for time taken = 30 × 80 = ₹2,400. Rowan bonus = (time saved / time allowed) × time taken × rate = (10/40) × 30 × 80 = ₹600. Total = 2,400 + 600 = ₹3,000. Check: option ₹2,800 would arise from wrongly using time saved × rate × 50% (10×80×50%=400) giving 2,800. Correct total is ₹3,000.
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