Page 71 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Cost and Management Accounting

Notes Note:

One unit is produced in 10 minutes
300 unit is produced in 300 × 10 = 3,000 minutes
i.e., 50 hours
+ 20% increase 10 hours
Time Allowed 60 hours
Time taken 48 hours

Time Saved 12 hours

Example: A worker takes 9 hours to complete a job on daily wages and 6 hours on a
scheme of payment by results. His day rate is 0.75 paise an hour. The cost of material is ` 4.00,
overhead is 150 percent of total direct wages.

Compute the factory cost under: (a) Piece rate, (b) Halsey scheme, and (c) Rowan scheme.
Solution:
Direct wages:
1. Piece rate 75 paise × 6 hours 4.50
2. Halsey

Normal wages (NW) 4.50
Bonus 1/2 × 3 × 0.75 1-12 5.62
3. Rowan
Normal wages 4.50

Bonus -TS/TA × NW 3/9 × 4.50 1.50 6.00
Computation of Factory Cost
Particulars Piece Rate Halsey Rowan
` ` `
Material 4.00 4.00 4.00
Direct wages 4.50 5.62 6.00
Overhead 150% of
Direct wages 6-75 8.43 9.00
Factory Cost 15.25 18.05 19.00

Task The standard time for a job is 60 hours. The hourly rate of guaranteed wages is
` 0.75. Because of the saving in time, a worker gets an hourly wage of ` 0.90 under Rowan
premium bonus system. For the same saving in time, calculate the hourly rate of wages. A
worker will get under Halsey premium bonus system (assuming 40 percent to worker.)

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