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Chapter 3

The document outlines various systems of wage payment and incentives, including straight time rate, piece rate, and premium plans such as Halsey and Rowan. It discusses employee efficiency, productivity, and turnover, providing methods for calculating turnover rates and the implications of idle time costs. Additionally, it highlights the significance of timekeeping, attendance, and the treatment of overtime payments in cost accounting.

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yusufsheik03
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5 views23 pages

Chapter 3

The document outlines various systems of wage payment and incentives, including straight time rate, piece rate, and premium plans such as Halsey and Rowan. It discusses employee efficiency, productivity, and turnover, providing methods for calculating turnover rates and the implications of idle time costs. Additionally, it highlights the significance of timekeeping, attendance, and the treatment of overtime payments in cost accounting.

Uploaded by

yusufsheik03
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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3 Pa COST CHARTER IRECT EXPENSES 1, Systems of Wage Payment and Incentives: + Straight Time Rate System: Wages is paid on the basis of time irre- spective of production volume, Wages = Time Worked (Hours/Days/Months) x Time Rate Straight Piece Rate System: units produced irrespective of Wages is paid on the basis of number of time spent for production. Wages = Number of units produced x Rate per unit ¢ Halsey Premium Plan = Time taken x Time rate + 50% of time saved x Time rate ¢ Rowan Premium Plan: Time Saved = Time Takenx Rate per hour + am 7 Time Allowed Time Taken xRate per hour 2. Employee Efficiency: If the time taken by a worker on a job equals or less than the standard time, then he is rated efficient. Time allowed Time Taken 3. Employee Productivity: It is used for measuring the efficiency of indivi- dual workers. It is an index of efficiency in the utilisa sources, materials, capital, power and all kinds of services and faci Efficiency (%) = x 100 Standard time for doing actual work 7 Actual time taken - Employee (Labour) Turnover: It is thé rate of ch: of employee force during a spe index. 5 nge in the composition fied period measured against a suitable Methods of calculating employee turnover: * Replacement Method = No. of employees Replaced during the period | 4, Average No. of employces during the period on roll 3.1 7 Separation Method ‘Na of employees Separated dutin the period oy = Fresee Neva employees daring the period on oll 4¢ Flux Method = Jed nlc Replaced die the eat SS sas bn tbe ems 09 oR Novof Spuation [Link] Replacements [Link] new joinings SAS SSEes Ne af employees during the peried on roll [Link] Separation [Link] Aceesions + Grarag Ne of empliness daring the perio on rll _Acconions = Teal [Link] employees joined including replacements 100] SiTESp som tame omen a ng 5 oes TE sane abn) Tete en ei cae aria cher hana searvoconver it into euivalent anal Employee turner rte Enyce Turover rate for the period ‘Nomberof days ine pevod—*** 7 ETHER QUESTIONS [Gi Disngish between Dinect and TndizeetTabour ost TCA Inter Now. 2001, 2 Mark} ‘Ans iret Labour Goats the conto coc paor payable othe employees ‘Mle can be desis anise wa cost obket in am economically feast ‘manne Tica candy eld and allocated to am aetna os ‘oe inomer, proce, product te Indirect Labour Cot isthe cost of beefs pal or payable othe employees, thi eannt be recy abate panier cat objet nam econo Eaten manner The diet labour cnt cam be Sent with and cam be charge 0 he fob Howeerngis aoa cn canot sched econ tbe ea as pro the fairy Ott anit feo be nla in the con of prncton MMLOYEE COST AND DIRECT EXPENSES a 5piscurs Bn four objectives of Time Keeping’ in relation fo atten: Seoee and parol [edn Non 020.4 Sark in relation to attendance and payroll “Tae objectives of time-keey dae Tee eho lalowss ws For the preparation af payroll ip Forealeulating overtime. 1 orascenining and controling employee cost. Ire or ascertaining idle ime, (2) For dscplinary purpones ) Foroverhead distribution ee ———————— i. Enumerate the various methods of Time bookings CA Inter May 2007, 2 Marks} Jan Following are the methods of Time Booking ve lobticket combined Time and Job ticket 1 ily time sheet, 1 Pive work card 1 chockeard “Gi Dicuss accountlng reatment of lle capacity costs In cont accoum) Mee inter May 2008, May 2008 May 2008 fay 2008, 3 Marks) [nude time athe time during chic no production iscarredout Because tbe ‘Mikes roma Sle but are pai Tn other wordy tf the difrence Between Ihe tne pad nd the time booked dle time can be normal or abnor ‘Treatment of Idle Capacity Cos: {i) Normal idle time: the normal eo placeol work, Formal rest ime Tanch beak oe Normal le ime cost wil be rate apart of cost of production hoc ofdicet workers, am llowsice for normal tae ne considered SRtingofstandand hours or andardrateandincase of indirect workers ‘oral le tne is Gonsone fr the computation of overhead rate, i) Abnormal le times The be some Factors which say give ise C0 Ibn idle time suchas lack ot coorlnaton, power Failure, machine ireakdovn, notavatiabiiy of rave material, strike, lockout, poor Supervision, fre, flood et ime which nnat be avoid or reduced in "Tine lst browcen factory pate a8 noticed ona prof prdton cos me oe Crt roi and Low cc Tica of averime payment on productive > = TCA Inter Nov. 2001, 3 Marksy ‘pam Effect of overtime payment on productivity: rer eed to, only when i 1 eXIetNely essen rein ha oe eee ee he a Pesgtshion i the fllowine w= 1 the overtime premium Pa ear gener dens rine we dg a less han normal oui rea ore, workers may ot concertos On Work da 3 or or asthe eu dang moval hours mss fa «raced ein ed ners remo oertine wil bring about ag SN cae podacon ac Discas the treatment of overtime premium In Cost Accounting Tea Inter Mey 2008, ay 2006, Nov. 2008, May 2003, 3 Marks), "> ronrine i resorted 0 atthe desire ofthe customer, then overtime premium mas be chargd othe job directly ‘6 Tonetne i equted to cope with general production programmes oe {or mectng tnpent nde, he overtime premtam should be treated 3s ‘hctad tnt ofthe particular department oF cost centre whl rly 1 IFescrime is worked ins department de tothe fault of another depart. Inco the overtime premium should be charged tothe later department {+ Overime worked on account of abnormal conditions such as food, forth te, should ot be charged cost, but to Costing Profan [G7 State the circumstances in which time rate syrtem of wage paymenk ‘cn he prelered In factory. nee ae el ‘Ans Time rate spstem of wage payment Is sultable forthe * howe sence canat te deel tangy InlpenSopenion nd cere afc ‘engaged on highly shill jo, a Apnoea [Oh Discuss the 1d an entra payment fa addition to the EMMLOVEE COST AND DIRECT EXPENSES is ‘6 where the pace of ontput independent 7 Shes pat 's independent of the operator. automatic gence bots baw ass ccc eR 6, Deere relly: Kew woges ay be ealcoaed under he Flown (i) Rowan system (0) Malesy system {IA iter Nov, 2008, 9 Marks} ‘time saved bears to the standard time, “ = Timessved Time taken = Rate por hour» GEMASED, ne then x Rate pet C2) Maley sen: Un heey seat ine ed or enlisted horsemen eo ie tintin oy sage re “Time taken» Time rate « 509% atime saved «Tine rate "G9, Which is etter plan out of Halsey 505% bonus scheme and Rowan Iponus scheme for aa efficient worker? In which situation the worker get nme bons in both schemes? TCA tater May 2010) 3 Marks) ‘ase Rowan Bonus Scheme payz mors bonus ithe time sae is Blow 30% fade allowed tthe ite saved fs more dan SO" of tine allowed then Halsey bons scheme pays more one Garry time saved by a worker fot more than 80% of ine allowed. So, the Ronn ms scheme tes fr Sheffiient worker When the ime save seul to SO of te sliced them tea plans pays same bonus is works onssunder Halsey Plan = Time saved 50% x Bons uider Rowan Plan Timeraken, «Timesaved x Rae perbour Tine alowed ann ‘Bons under Halsey Plan il el the Bors under Rowan Plan when thellowing condition hla ood! Time tahen, 5 Te saved» Time rate “timesoved «SOR Time rate» GTIDEGASS x Th fone 50% = Time allowed vie ente satiny Otten benny ear maT eminem eer eae ae ed Serteyer the Fe cute hoe eceenreeorenpet® ye es oe zoos concert Berean tition of excess or shortage of EMPLOYEE COST AND omer EArENSES od Number of employees Senarstel dar the sctaraton Method» ——SePaBed diate pod gg ‘Average numb of employees during the period on roll (i) Flux Method: This method takes both the numberof replacements 38 aga Ts mrt ksh 2 "alba tssetematan dn pred in acon [Link] emploves Replaced « [Link] smploses Separated dur the ‘crag number af emploseex ring the period on tll ‘When numberof acessons are considered for measuring emplosce tumover the employee turnover rc by Fan method sas be corey bytsing any one ofthe folowing expressions me No. of Separation « No. of Replacements "Nova nee joinings Fux Method = 100 cams «10 ving out werk sty forse fixation of wage rte, and forthe simpli. ‘rage numberof employees * Sin and standardisation of wor ‘during the potion tl "Gi. What doyou understand by labour turnover? How leit measured oR “eA ter Nov 2014, Now. 2010, Nov. 2008, May 2003, 5 Marka} [[Link] Separtions + [Link] Asesions ‘gas Eiploneetarover or labour tumover imam organisation s the rate of ‘nce the compotion femplyeetoreedulaga specified period measured Sesmo sutable nde “The standard of usual employee tumorer In the industry or locality or the mplyceturoner rate fora post period may be taken as the index or norm ‘Sea wich actual turnover rates compared. ‘The methods lor measuring labour turnover are (@ Replacement Method: This method takes into consideration actual replacement of employees respective of numberof persons leaving the ‘renisation ute emplpes Replaced igh Bed “Average number of employees . Sangh edo all Note: ew pls apne on secon fens plan of the ora ‘sation are not included in number of replacements, sonra of ea (Gi Separton Mesa nts co Serge ett tet ome a mens by ou to emayc spared daring poe eaves alemfoeescaporaauer ere Replacement Method = 100 ‘Average numberof employees ‘daring the potod on ull “QIz. Enumerate the causes oflabour moves [as The main causes of abou timover nan erganictiowinduty in Be trond lassie wnder the fllowing thee heads (@) Personal Causes: These are the cates which induce or compe work ‘(oleae thet jobs ac as change of jobs for betterment premature erent de toil health or od age: domestic problems and fail Fesponsiiites dacontent ove the abs and working cmironment (©) Unavoldabte Canes: These are the causes under whih it becomes thligatory om the part of management to ash one oF more thir mployestoleavethe organisation sich sseasoal rate ofthe buses ‘fortape ol aw mater power sick rmaket forthe prindact change in the lant Toatins mariage (general nthe case of women (© ‘anssencnt ons coins Hae 20 ao hep the abou urna Fain Tow oe posible The rain causes are dissatisfaction with ob, * sp of work working contns: sted agg + weet worker: lack of tay “hig wih managements waese and alls, PNA Alan promenade oat aia wi Taboo barmove > Baca the wo Tere! Sr cs pa er on as rr ait ear incurred to prevent employee time aioe mplanee elfare Tike pestion ge otheemonee = Sava an stain employees. = ove are the costs which arise due € employ oy emer Ste Th Ma tr cc turner, 1 employes ood work, additonal costs wil have 1 feign epee oP eh ne sngand nace Serer an eines a Jrefficleney of new workers Eee acm cae eat ona Sosa se eT ea teen I al pens oe ee ee ee a “Glas Deserbe The remedial steps to be takon to mlnmlze the Tabour eration, snort ng {cA ter May 2019, Now 2007, # Marts) Tu Te allowing eprave Tl for minimizing bon trove: G0 buh An meri oe arranged wth each ouaoing emple BAe hha fi avn the orgasim i) Jovan and salut: tosscersin the requlrement of ach Job Ciyorantsaton shold mabe use of «cent saten of rcrtnen, ple ent nd prmoton or cuployee. (Ge) Organ soul create heathy atmosp ‘eal and housing facie for worker. (0) Commie or seting worker rivanees re providing edueation, med (15, What do you mean by employee productivliy? Polnt out dis Fact ‘whlch must be taken Into consideration for increasing employee duct TNov. 2023, 4 Mar ‘Anas Employes Productivity Products i generally devermined by th Inpuvistpat rato. n ease of emploseey i Is ealculted on helo Stand | time for dong eto work Aca ime taken Emplayse padi ed for measuring the elliccncy of individual workers. san index of efficieney sb ation of han erent apap andl ine seamen the tin raion inp, Pod canbe pened reducing the input fora certain quantity or val af pat or by ioetnS {output om the same een quamity sree et io ete ree ee 1. Employing only those worker who possess the right spe of kl 2: Placinga right wpe of person wa gle ob, 3 Training young and old workers by proving them the right types of Spportuniien it pes 4, Taking appropriate messures ovoid remplayecs 5. Carag out work stl fr fain of wages an forthe smplifcation and standardisation of work. Sr amen Ea es ‘CALCULATION OF EMPLOYEE CST WITH IDLE TIME “i, Following dain have been exacted from the books of Wi ABC ‘Private Limited Be hee (@ Salary (each employee, per month) he ituatlon ofexcessorshortage 30,000 Gi) Boms 2566 of salary’ (it) Employers contribution to PE ESt te. 15% of salary (is) Total cost at employees” welfare activites 661,500 per annum {@) Total leave permitted during the year 30 days, (i) No:of employees 175 (oi), Normal ile time 70 hours por a (if) Abnormal ile time (due to fare of power stppls) so hours e) Working days per snany 310 days of 8 hours You are required to caleula (@ Annual eost of each emplayee i) Employee cost por hour id) Cost of sora dle time, per emplesee iA Inte Now. 2018, 5 Marks) a10 (i) Calculation of Annual Cost of each employee San Fao8= co one 25% ofan) pe] Conan voPF ELISE wan oan co Truce seunines EAL s0017Semploveed | 3709 Fos Ramu cot of ech employes a iy Calcaation of Employee 0st per hour Tocing eas odae 8 On) aerate ve hours 30d «bed ectve Working Hours Enon Cont per Hour © 507,7802,170 hours = 234 [Note In anaumed that 310 working day doesnot include eave dys iy Con of aormal idle time, per employee il be € 1,700 (234 «30 four. {INCENTIVE PLANS: ROWAN AND HALSEY a Sapo a aT Arms a mre ease net sealer fontaine ne eerily aed a coc Bidens eins erie ee Fait nae peng cae Stein penta Be eance renee eee Seis tuteinceionr ann {60 nr 60th) i "MrLovts cost AND oxmecrExrESSes an rime cont t33680 Tess Dice matriat 28,00) Direct wages t52m0 [Now Elective wage rate Actual hs worked = ¥ 5280 5200 effective wage rate arene) Oh ow ‘aes (Under Haley Plan) = TF TR + S0% of TS TR 260 hrs «fs» Sov of (A-TD «TR £5280 «84800 + Som af -eOhm) «= SOE Sessa00 +400 82.400, 27th -Therefore standard time for competing the Jo 72. i) Bllstive rate of wages under rowan = TP TR + xTS4TR corm esate inate =t5.600 ere, TE = Time taken TTR = Normal ime rte TA=Time allowed fe standard ine ‘Gk Rowan Premium Bonus system docs not motivate a highly Boor O17 20 workers = otra "100 {G7 USE Hite wanutactorer doa ip motoreycle tyres Tn ‘he manufacturing proces, it undertakes tice different Jobs namely, cate eke ic ee pre ge Hecate Senta gee eee Hetieatinitiardeaeebah ecco ee 1 Rent fora quarter is 18,000, ‘The cout of the special machine fe 19,20,000 and deprecation x Charged © 10% per annum on straight ine base {Other indirect expenses are recovered at 20% of dircet wae: ‘The factory manager has informed that in the coming yeas the total {ect wages will be €12,00,000 which willbe tmcurred evenly throu cou the year ‘Daring the fist mos of operation, the following detail are asilable om the Job books Number 6 hours the spot machine was used Bote ] Without the ald ofthe] Wh the aioe] ret Son | akaaing S00. 00 [Brushing 1000, 400 | ‘Striping : TC 200, J You are required tos {@) Compute the Machine Hour Rate forthe company as whole for fhomth (A) when the robot fe wscd ad (B) when the Fobot Is ot (Compute the Machine Hour Rate or the sis shag nd Stn sets vidya ob ie Vlea- ars) 328 viovER COST AND DIRECTENPENSES Working Note iva) Total special machine ours used (S00 + 1000+ 400 + 400 + 100) (@) Tora special machine hrs. without aid of robot ($00 + 1000) (c)Tosl epi machine hs wth of abot (40 + 400 1200) a Tova evoreads of special machine per mont! Rent 180003 month) Depreviaton (192,000 « 10% 1/12) ther indict expenses {20% of 12,0000» 112) (e) Robot hire charges per month (2.70.00 = 6 months) = 45,000 Overheads for using special machines wthout robot £22.00 3500 hs (© Overheads fr using special machine with rbot, +1500 irs = 18,000, 2.000 £9,000 +2000 hrs, + 45,00 Computation of machine he rate forthe firm as whole for theneoat When the robot seed 69.00 2.000 When the robot e not a = Tce e350 ‘msceLUANEoUs O18 Te manapemen af s compny is woreda teereneil spy thet oan aan result of labour turnover in the last year. : Their neon lntour imovr inthe atoy and foe snaljing tesa sd 3809 4s 20% 60% 1600 2000 2.000" a rial rbot SE ibility eager Soap ie tees et is Cia ml nee es een Re Sorin Stier rama ca cantare ‘pss coco nan dome eames Settlement costs due to leaving eanazo’ Recruitment costs cua, Selection costs 12750 ‘raining costs 30.490 [Assuming tha the potential production lost ara consequence of labour eer epee eesrreetr Sct hee lta {ICA Inter Nov. 2019, Nov. 2001, 5 Marks} ‘tual Produetion Hours: Actual Hours worked (neiding hr. tributable owl 445.000 ign reer) ese: Unpredctive hours (30,0002) 13000 Productive hours lost: 1s of potential productive hours 10,000 a: Unproictve taining hous 15,000 ss of contribution due to unproductive hours: Contato fom 430.000 Productive Hrs (Sales vale PV rato) = 83,08 300 20% 1.60660 Conon from 1,1.000 productive Hours ost 115.000 = 4.84130 Frit foregone ax result af abou turnover, Contiution foregone satan i ‘23820 ee move Sesion a2 oe 55 Recnen cote sie Esp 5 adccided sa to what Kind of wage scheme shoaigy SS SoA ae RE thoy Senin a Siena elena tt | af Fe WRC —rta ali Woses @ [Unie] Waser 7 o | wo fo laers|'o'|aeo 0 | 180 | 36] tao 200) 500 _| [350 ‘Sine och worker has been gunranted 750 of base pas cornings re a St than S0% of asic pay (guaranteed hourly rac), thercore, earning OF the Bt ‘cet nes Works And wl pate wagesascomued aa wo i B SerElad and is reapetnee Te computad crane dere eal te [oe | ete eres Bint Pc isan SCTE he ae as eee seh came tegienareg gens eet HOO aa a « Aorking Notes: erodes 36 = Bs. 1. Piece ratelper unit Poa rs ca : zi Fiat | Sant te | Pie aS EPS [a area cena eee a tte a o o @zwx0 =F ch minute is valued at € 0.10. You ar ‘ aie — Tappan of pas ae cl = . us ie Fa ara in inc wages ofeach worker under @ o an ue 7) erred erly rt bai srs aowcl pare i) Piece work earnings boss, but guaranteed at 73% of basic pay USctamteed hourly rate) his earnings are less than 80% of baie pas (i) Premium bonis basis where the Worker recelves bonus based Rowan scheme. “i6a inter Nov. 2002, 9 Marks), 10) Computation of wages of ach worker under guaranteed hourly rite baat Worers [Acta hours wed | Howdy mica [Wass nase sneer) © © © ©) (@ Compuiation of wages af each worker under plece work earl fon 7 rs piece work earnings Worker A = (21 units «12 min) + 36 units 18 mind “(46 units «30 min) “= 2.250 min of 38 hours Worker B = 25 units» 39 min = 750 min oF 12.5 hours Worker © = (60 unis 12min) « (135 unite 48 min) (it) Computation of wages ofeach worker under Premium bons bass (Gshere each worker receives bonus tnve on Rowan Scheme) Work: [Hime | Time [ Tne | Wage rate! [Barings] Honus ‘om [allowed taken famed] Beer” |g |e rows | howe [ows] Bons ©. 33 sriovt8 COST AND PIRECTENTENSES Benes oad ee BSShawe 5 54 hours 87.20 Bonusunder Rowan scheme aes “Sab. Foliowing are the particulars of two workers Wand S Tora) ‘rome oa — xs | sc Wares T5000 | 30.000 | Denes lownnce ‘son | sore | Conon wo EFF (on bake wages) me | aa ‘Contribution 4 ES om base wages) ae | oe tial erling Four Tor We month are 200 hrs Overine yaa ris ee anc otal ef rormal wages and dearvess allowance: Employer aeseai oStateIourance snd Providem Pd ae equal Pte, ‘hk cmplyecr coirutions Both workers were employed on Jobs A, Band Cin the flowing pro: pertone -tonaaeas eae = Saaea | nae Tom 15 ‘Overtime was done on job Son are required et | (i) Calelate ordinary wages rate per hour of ‘Rand's Gi) Mlocate the worker's cost to each job ‘XB and ‘C. i {CA Inter Nov, 2020, 6 Marks) (0 Calealation of Net Waes paid to Workers R’ and ‘S! = Re] Sa] i Wags 15,009) 30,000 | ber Atlan DA) (5% of ak Ween 7500] 15000 Overt Was Beer a Working Note 1 sto] | on Wages trad 77.000] 500 [tess mniden rand 5000517. €30000| ,050)] (2.250) PMMLOVEE COST NO omEcr EXPENSES ba ees ec Tex FST = 8800) Ha ee Calculation of ordinary wage rate per hour of Workers Rand S" RO [5m os Noes Das Ws “DA ding cf Se snplae’contbuen @ Phases aS {€29850« 70 ar) EPR. Ny | (a Statement Showing Allocation of workers cost to cack Tob wal Tobe oranary Waee.0523) | 2325000] rra87s0| 2asseo| 357750 Jowinary wages 2:12) | 375000] 19.14000|_sis7000| 19.30.00 7620000 | 4.52750 [1,955.00 | 38717.20 ‘working Note: Normal Wages are considered as basic wages, ‘(Basie wage DA)«20 hours _ 24822500,20h0ure 70 overtime = 4.500 GBI, ADW Pe. Ki manufactures a produc which veqalice sl and Freon in work to get quality products The contpany harem exper {cing high inbour cont duet low speed of work ie manapeoent of tlecompany wanteto reduc he abour coe! bat vidiout comprorsing ‘inthe quay of wort wane fo trace a bonus acheine Bat inderomt etrcen the Halony nnd Rowan scheme af bones For the month af Nove 202, the company baeted for 24,960 Touro works the workers are pid ® 80 per how gules CALCULATT: and suggest he bom scheme where dhe timex {nken Gv) to timc aloud vo compte the works (a) 100% () 75% (Osby 8% of bdgeted hou 2019, RIP) su sanome tau unde te ono sees ated a l er Eee s ae SS ae |e [Roe | He me nae |"a" |“ | “wo ao tom eon “| | | set] ese] 8) S| ee] saa | en] se |e j= eee |=} acs] 1950 | 5000] epee | TAN bint ExrENses 335 SS (Gp Gateulte the loss incurred de to incorrect rate selection, had. Iowan scheme of bonus paymen fans ate theses a ated "Rowan schemeof bonus payment had (o) Diecut sua (o) Discus tof Rowan heme bonus payment or JBL Ccaleation of loss incre “ ealent Incired due to incorrect rate selection (hie ealeuTating loss only exes a on fg los ony exces rate por hour hasbeen taken) Sander Tay Plan = S0% of Time Allowed = Time Taken) » Rate per har Bom under Rowan Plane Ti TAKES, Time Saved Rate per how Tue aboed Rowan scheme of bonus keeps checks on speed of work asthe rte of ieentve Festa upto s0r of tne taken t time allosed but the rate decreases ‘eerie tahen ote aloed comes blow 50%. I provides incentives or Sattar monkey for song in tme bt also pats check on caress speed. On nbchonction of Rowan scheme, she management of ADV Pt. Lid. would Hee Mtot afte slow spond work hile maintaining the ski and precision ‘ouired maintaining the quality of product, "G22. JBL Sisters operates a boutique which works for various fachion! ‘ouscs sed retail sores It has emploved 26 workers nd pays them mn me rate basis, On am average an emplosee ts allowed 8 hours for {outlgue work om aplece of garment-Ta he month of December 202, {ro workers Mand J mere piven 13 picces and 21 plecer of garme ‘eopectively for boutique work. The following are the details of thelt works Work seed 1s pe. 21 pes Workers are paid bonus as per Halsey System. The existing rate of w ‘erie € 60 per hour hs per the new wager agreement the workers wl end ofthe month i ofthe company hs wromaly ealeutated, wages to these two Workers tlng® 72 por howe, es xo [6 8 a Goma or pr Hay Scheme) GOR | Ta Boat Tw i alston of ta eared doe can te secon a fawan scheme ft payment ser aT) Te Tear o axe Wae TAO TDH Tim | Tamim = | 2880 seme Gaara) | (18.26.012) Calculation of amount that could have een sved if Rowan Sehesn ‘were flowed BO [IO | Rae ge pal wn ay Seems rae | tae | tes Brose ss [eo [a [ae] ative payment asthe following benelit in which JBL Sisters (@) Rowan Scheme of wih ie ‘eth the natine of nes ager bon By merle HOGTSSIPE 1s Work speed Rekergargetgt beth sate ce Ticeea maa the quality of ent te. oy ra cectng departmentcommitsany mistaken sttngstay, en ee era akento complete the works, the los incre ‘tte reat low “GEE GLA, paste llowing oaskilled worker cngaaedin production oe Orie a ng are tne employee benetits ald tothe employee EMPLOYELLCOSE AND Bret xrEnses ood apy Tifecive waees rate pet Four GE ay Biecive wanes rte per Four atwe (an Wings tobe charged o Job no. 317 200, as telat of enenings per day ie aay 1.900 = 26 dys) Romess allowance (20% of hse ala) 1 ane tent alowance (16 of Fails) "vie the Fowrly rate (opsdars sie aa ay [eta eran [E1000 [| esres Alwanee HS of a | eer onrbaton Prove nd (1 31200) () [Beme ret allowance FO of bse = et perkeonrtion 10 Person ind 31.200 or recrtalowance —_|€ 50 per day of actual work i aertng tava woth OD "york of Tlaay and Sam o Incas fours he hela Sunday a [eases cgi for ail allowances. an aso deductions (© Bet ae Go tere pd ve Tay | Emploe7s constant | 12% of basi and DA rode fund | ln ron | Hak nl DR ‘a month, The “Te company normally works Shout «day and 36d Zaapanh provide 30 ines lnch beak in between. During the mont of August 2020, M7 work for 2 days inlding 15 ‘ea ne» Suda a pied for 3 dye nu ens On 1 ‘Aust sed Sunday he worked fr and 6 hours roopectively without Junch break. ite On Sthapd 3th Avguathe worked for 10and hoursrespectvely: During {he moath Ae worked for 100 hours olan HT 20. “You are equired to calculate: a (@ Barnings per day ei Behan nt an hua] | ey i eset ene] | |yomymatinanee eee amines per dy | __0 dr ce poo 5 lio Calcultion of effective wage rate per hour of Me Ze mie lng 100 = 26d) Aaa st salary For Soday& olay (1,00 2d) ramos allowance 20% f basis) hase et allowance (6% of base aby) Tomar allowance 5023 dys) vein allasance 14D 22 has) Envoyer conniution so oe fad (2% 33400) Enola onion fo Beason fad (633500) al manthy wagee as work! 62 (hes) five wage rte por hou (Daily Basie + DA) = 7.5 hous = (100 +200) 07.5 = 160 per hour id Caleutation oF wages to be charged to Job no, HT 200 2258 100 hous = 24,800 ae saioxt cost A ans capone SA rhe We oto SEZNE Sinai ocomne scheme = ther Maley Scheme (he de ipetcit i pete cite rer ce ro Reta ns it irene oe Scere it peeceateses Sea see Re aoe etieae ee eon fing ea am sete neni for thea ogee fate warhern coud eordingly een sesurance tothe worker aon rertce on aren produc has Ber cece -BSSSUEGOURP ARE puns for he month of Api, 2020: 1 tora of wees earned) a eae ie or predcng ane rity one water at the ; a ee ay ke See soe) 1975 hoy Numer a worn deste month _ omer af working hur po ny of ach Worker Atel procton tring he month Rona , pce theses ners inearnns of verter mse Sain der itay snd wa see ty Cea he ving o£ i nef ict Ibour cst pe (0) Cait ander boa the schemes: iy aver aoa tne stton the seme that woud a ” fesasrance of ncentvsing workers and also to sdjost with i coi chinese Lehner 38 tr 6,120 unt Working Notes 5. Tt time wages 50 workers pe nom [Link] working days in dhe month x [Link] working hours pr day et tach workers Haury rate of wages No of workers +24 days 8 hs 125050 workers €4.80,000 2. Time saved por month ‘Time alloned por unit oa worker 1.975 hour No. f units produce during the month by'80 workers 6/120 Unis ‘Toa cme allowed t reduce 6,120 units (6130 21975 he) 12.087 hous 0 w FMMLOWEE cost Axo omnecr EXPENSES a2 Acta me ten to produce 6,120 unis 24 days 2 8hr «$0 workers) 19,600 hours “Tame saved (12,087 hours 9.600 hours) 2487 hours onus under Halsey scheme to be pid to $0 workers onus» (50% of time sted) = hourly rate nf wager = 01100 x 2.487 hours «850 = £63,178 ‘Total wages to be pd to SO workers ist 542.175 (@ $80,000 + 862,175) 112 Lid, considers the otroduction of Halsey Incentive Sehcne ¥6 Increase the worker products, ‘ ‘Bonus under Rowan Scheme tobe pid to $0 worker Bomis taken = THREAD, Time Saved x Hourly rate = BONO 2.487 hes xt 50 = 98,754 ‘otal wages tobe paid to 50 workers are(€4,60,000 +£98.764)5.78.764, 12 Ld. considers the introduction of Rowan Incentive schcose 0 Increase dhe worker product, (a) Effective hourly rate of earnings under Halsey scheme (Refer to Working Notes 1.2 nd 3) «= Totatime wages of $0 workers Total bonus under Haley scheme “Tota hours worked PE _4.80.000 862.175 3.00 hours = 5888 Effective inctease in earnings of worker (in) = S848=80 109 2968 (0) Effective hourly rate of earn (fer to Working Notes 1,2 and) under Rowan scheme 2 of 0 workers + Tal ons under Rowan scheme "Tol hours woke E.sqou0 £95995 60.29 fcetive increase in earings of worker (ne) 50 109 = 20.8% (@) Saving Scheme! fr to Working Note 3) terms of dleeet labour cost per unit under Halsey a0 uriovts cost ANDDIRECT EXPENSES aor cost per uit under time wage seme) = 197S howe» F808 9875: Labour cot per unit under Halsey scheme) etl wages pid underthe scheme _ £54215 = USNS ofan pauced “620 ‘Soving pr uit» 9875-8860 8 10.15 {Sv tm of st worker cou per ai ade = 28860 (cert Working Note) Latour cost per unit under Rowan scheme = £5.78 76416120 unis arsasr Ssvng perunit=€ 98.75-£98.57=84.18 Gy Calculation of Productisty [Rol Paton Hour work pr Hoar 6001 975) aa dct Prtacton Uns cal Inene nab redactity 1235) Prada i icreae in reduclon Nowa production 2595] |Advice: Rowan pln falls the company’s assurance of 20% Increase oer {he petent earings of workers. This would Increase productivity by 25.9 ‘only 1 wl not adjust with the fnrease in demand by 40% [GiS-liva factory the base wages rate Is € 100 per hour and averting] ‘les are a follows: ‘ Se as ae] ns rae eal Ee sini “+ Normal time 1,00,000 hours an 1, ‘7 Overtime before and after working hours 20,000 hours ” Overtime oa Sundays and holidays. 5,000 hours } ‘The following hours have been worked on job | [Xena | Bon cactus roo ene mth it 1125 hours, (ae a EMPLOYER COST AND rRteT EXPENSES at aero LETTS Gaeta aoa TSN Maer ae nonkers shang tt tourhout the yearas.a polly i weg nertine worked i ction. (p where overtime lworkeda th request the customer toeapeie tbe abe car atodated ularly to meet the requirements of o st ‘Computationofeffectiveaerage wageratencludingoverime premium): Sa wage (100001, = 8100) Nore forverie before and alter working hour, Neiohrss 100. 7) {ge for overt om Sundays and haidys [Siloti xe 00 2230 Fol wes for 12,000 rs seine average wage rate = (SUSSTEOM) yy (a) Where overtime is worked regularly asa policy dus to workers! shocte see ‘The overtime premium is weated as apart of employee cost and job is ‘Charged at an fective average wage nat, Enployee cost chargeable to Job 1125 hr, x 117 =8 131,625 (Where overtime Is worked irregularly to meet the requirements of production: Basle wages wll be charged t0 the Job and overtime premium sil be crged to factory overheats Employee cost chargeable to Job «1125 hours x 100 = € 112,500 Factory overhead: 100s. @ 175-3 100)) + [25 hs. x 225 ~€ 100) £87,500 483.125 = £10,095, (Where overtime s worked at the request ofthe customer, to expedite the Jabs Overtime premium sill also be charged 10 Job 2. Employee cost of Jb Z 5s, «€ 100) Normal wages 112500 32 {ar10yEE COST AND DIREC ENFENSES 343 ore Race | opine | aac ae] Ce asimxti) — —_£1beas sso [Ek ie" ] Teme | co | so Teams eee vied" | Sete a a Tan Tne pU orp stoner na erp a : re Eenegg nates | rm, ; : Worker’ | Worker > se re ce i = sey | S05 | aes) | ee : 1 me | are: | sateeg| Baan mere | aes |e | 105 0 105 Normal | Extra | Overtime | “Equivalent normal! Total aoa | a ee ee sar he! to ts te cree |e aon | * hs ar ST yes a te 7 ee y alta is te ie ose , Coty oe : t Smear : secloced sa so Sta ra : [ria ain canayezcoelinvon ieworken estate, | (oats “ i Fagen ae nee errata mae (as oo i a te aerrennuenaen et eerhenicanreen| | 2 Tineato ca mont eh eroalimonerioerpeaneatony| | Rel ST ere repentine remerer pare Soa aes [oe | Ea ‘Sunday is a weekly holiday and each worker has to work for 8 hours on ‘hours, | hours | hours |" hoars for overtime | normal all week days and 4 hours on Saturdays; the workers are however paid. cone a despa Senay oar for Sus ork a 7 esl Overt pal wee af diay wg re ira worker wore fe] | fasy Tt : morta hreinadsyarteyagc howe waved Racivan, | famed [—#—| “| a : = Shani tl nro torso atta fete tows | fama “| “EPI t = month. The company’s contribution to Provident Fund and Employees _ Feay ® | = 2 Siate Insurance Premfum are abnorbed into overhends. aif) (sense zeal eleaianeiage yma iseaente lreasstotie | | [asf woe] a_i alent os op othe workers ton of Woe arabe a aos : i : = ous | hows | tou en | Boab per our Tm or Tans me yiqiys t teaposstt| termes] 00h) ean en ey : ‘ Caan | essol eae] ean 3.44 EMPLOYEE COST AND DIRECT EXPENSES Workers A B Total normal hours 54.00 48.00 Total Wages payable () 1,647.00 864.00

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