Page 68 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Unit 4: Costing and Control of Labour

1/2 × 2 × 2 = ` 2.00 Notes
Total earnings ` 18.00

Rowan System:
Normal wages = Time taken × Hourly Rate
8 × 2 = ` 16.00
Bonus = Time Saved/Standard Time × Normal Wages
= 2/10 × 16 = ` 3.20
Total earnings ` 19.20
Note: Time saved is 10 hours
Time allowed (standard time) 8 hours
Less: Time taken 2 hours

Example: Calculate the total earnings of worker A and worker B under
1. Halsey plan, and
2. Rowan plan
Time Allowed 24 hours
Hourly Rate 8 per hour
Time taken by A 20 hours
Time taken by B 18 hours
Solution:

Total earnings of worker A
Under Halsey plan
Normal wages TT × HR = 20 x 8 = ` 160
Bonus ½ × TS × HR = ½ × 4 × 8 = ` 16
Total earnings = ` 176
Under Rowan Plan
Normal wages = TT × HR = 20 × 8 = ` 160.00
Bonus TS/TA × Normal wages
4/24 × 160 = ` 26.67
Total earnings = ` 186.67
Total earnings of worker B
Under Halsey Plan:
Normal wages = TT + HR = 18 × 8 = ` 144
Bonus 1/2 × TS × HR = 1/2 × 6 × 8 = ` 24
Total earnings = ` 168
Under Rowan Plan:
Normal wages = TTx HR = 18 × 8 = ` 144
Bonus TS/TA × NW = 6 × 144/24 = ` 36
Total earning = ` 180

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