Page 70 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Unit 4: Costing and Control of Labour

1. Straight piece rate: Notes

Actual output x Rate per unit
150 × 1.50= ` 225
2. Different piece rate system:
when output is above standard:
Actual x Rate per unit x (Normal Output/100)
150 × 1.50 × 120/100 = ` 270.

Halsey Premium System:
Time allowed = 150 × 20 minutes = 50 hours
Hours worked = 48 hours
Time saved = 2 hours

Time taken (hours worked) × H.R. + 1/2 × TS × HR
48 × 3.75 + (1/2 × 2 × 3.75)
= 180 + 3.75 = ` 183.75
Rowan Systems:
TT × HR – H ^1 × Normal Wages

48 × 3.75 + (2 × 180)/50
= 180 + 7.2 = 187.2

Example: A worker manufactures 300 articles in a week. He receives guaranteed wages
of 48 hours per week at ` 4 per hour. The estimated time to produce one article is 10 minutes and
under incentive scheme the time allowed is increased by 20%. Calculate the total earnings.
Solution:

1. Piece Rate:
48 hours at ` 4 per hour 192
12 hours at -do- 48
60 total earnings 240
2. Halsey Plan:
Normal wages 48 × 4 192

Bonus 1/2 × TS × HR
1/2 × 12 × 4 24
216
3. Rowan Plan:

Normal wages 192
Bonus TS/TA × NW (2 × 192)/60 38
230

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