Page 69 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Cost and Management Accounting

Notes
Example:
Time Allowed 20 hours
Time Saved 4 hours

Hourly Rate ` 5 per hour
Calculate total earnings under:
1. Halsey and
2. Rowan Plan
Solution:

Time taken is not given. Hence, it is to be ascertained.
Time Allowed = 20 hours
Less: Time Saved, = 4 hours
Time taken = 16 hours
Total earnings under Halsey Plan:
Normal wages = TT × HR=16 × 5 = ` 80
Bonus 1/2 × TS × HR = 1/2 × 4 × 5 = ` 10
Total earnings = ` 90
Total earnings under Rowan Plan:
Normal wages = TT × HR = 16 × 5 = ` 80
Bonus TS/TA × NW – 4/20 × 80 = ` 16
Total earnings = ` 96

Example: From the following particulars, work out the earnings for the week of a worker
under:
1. Straight Piece Rate

2. Differential Piece Rate
3. Halsey Premium System
4. Rowan System
Number of working hours per week - 48

Wages per hour - ` 3.75
Normal time per piece - 20 minutes
Normal output per week - 120 Pieces
Actual output for the week - 150 Pieces
Differential piece rate - 80% of piece rate

When output is below standard and 12% when above standard.
Solution:
Weekly wages 48 × 3.75 = ` 180.00
Rate per unit = 180/120 = ` 1.50

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