This document discusses the Rowan plan, a bonus system for paying workers. It was introduced by James Rowan and is similar to the Halsey plan but calculates bonus differently. Under the Rowan plan, bonus is determined based on the proportion of time saved compared to the standard time allowed. The document provides formulas for calculating total wages, premium, and bonus under the Rowan plan. It includes examples of calculations for workers under the Rowan, Rowan premium, and Rowan bonus plans.

1. COST
ACCOUNTING
Assignment
about
ROWAN PLAN
BY
L.ABINAYA & SANGEETHA.
S

2. Rowan plan
This plan was introduced by James rowan. Its
similar to Halsey plan in many respects
except that it differs in calculation of bonus.
Under this system, bonus is determined as the
proportion of the time taken which the time
saved bears to the standard time allowed.

3. ROWAN PLAN
MERITS:



Checks over
speeding, overstrain
by worker.
Assured minimum
base wage.
Efficiency is
rewarded.
DEMERITS:



Discourage worker to
over achieve.
Difficulty in
ascertaining wages as
it requires large data
processing.
Sharing of profit over
achievement may not
be liked by worker.

4. FORMULAS






Total wages under rowan system:
Earnings=T*R+S-T/S*T*R
Rowan’s premium plan:
Earnings=T*R+S-T/S*T*R*DA
Rowan’s bonus plan:
Earnings=S-T/S*T*R

5. Rowan plan
Example: 1
Standard time 10 hours no. of units to be completed
5 hourly rate is Rs.0.25 no. of time taken 8 hours.
Calculate a worker time under rowan plan. Also
determine the effective rate of earnings per hour.
Solution:
Earnings=T*R+S-T/S*T*R
Standard time=10
Time taken =8
Rate per hour=0.25
=8*0.25+10-8/10*8*0.25
=2.40 per hour

6. Rowan premium plan
Example:2
Calculate the earnings of a worker under rowan scheme.
Time allowed=60 hours
Time taken=48hours
Rate per hour=Rs.20
Dearness allowance=Rs.2,000
Solution:
Earnings=T*R+S-T/S*T*R*DA
=48*20+60-48/60*48*20+2000
=960+2192
=3.152

7. Rowan’s bonus plan
Example:
For Job No.54, standard time fixed is 50 hours.
Standard rate of wages per hour of worker ’A’
is Rs.10. A has completed Job No.54 in35
hours. Works overhead chargeable to the Job
is 75% of the cost of it’s standard time.
Your are required to calculate:(a) the normal
time wages, bonus of the worker for the job
under rowan plan.

8. Solution:
Bonus under rowan plan=S-T/S*T*R
Standard time=50
Time taken =35
Rate per hour=10
=50-30/50*35*10
=0.3 *350
=105
…..