Page 144 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes
Example: Calculate total earnings from the following data:
Normal hourly rate ` 4
Time allowed for a job 20 hours

Time taken 16 hours
Solution:
Total earnings = Time rate × Time taken + 50% of (Time saved × Time rate)
= (16 × ` 4) + ½ (20 – 16) × ` 4
= ` 64 + 4
= ` 68

(b) Halsey-Weir Scheme: Under this scheme, a worker will get a bonus of 30% of time saved as
against 50% in the case of previous scheme. In other respects, both Halsey and Halsey-Weir
Schemes are similar.

Example: Continuing the previous problem, the earnings under this scheme will be:
= (16 × ` 4) + 30/100 (20 – 16) × ` 2

= ` 64 + 2.40
= ` 66.40
(c) Rowan Premium Scheme: This scheme was introduced by D. Rowan in 1901. As before, the
bonus is paid on the basis of time saved. This plan is also similar to Halsey plan except in
calculation of bonus. The formula for calculating wages is:
(i) Total Wages = Time wages + (Time wages × Bonus ratio)
(ii) Total Wages = Time taken × (Hourly rate + Hourly rate × Bonus ratio)
Time saved
Bonus Ratio =
Time allowed
Time Saved = Time allowed – Time taken
Illustration: X, Y and Z are three workers working in a manufacturing company and their output
during a particular 40 hours week was, 96, 111 and 126 units respectively. The guaranteed rate
per hour is ` 10 per hour, low piece rate is ` 4 per unit, high piece rate is ` 6 per unit. High task
is 100 units per week.
Compute the total earnings and labor cost per unit under Taylor, Merrick and Gantt Task Bonus
plan.
Solution:
Taylor Plan: High task is 100 units:

z z Worker X: 96 units × ` 4 = ` 384 [X will get the wages at low piece rate as his output is below
the high task]

z z Worker Y: 111 units × ` 6 = ` 666 [Y will get the wages at high piece rate as his output is
above the high task i.e. standard]
z z Worker Z: 126 units × ` 6 = ` 756 [Z will also get the wages at high piece rate as his output
is above the high task, i.e. standard]

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