This document discusses various aspects of labour cost, including direct labour, indirect labour, labour turnover, and idle time. Direct labour refers to workers who directly produce goods, while indirect labour provides supporting functions. Labour turnover measures the rate at which workers leave and are replaced. Idle time represents time workers are paid for but do not spend on production, which can be normal or abnormal depending on its controllability. The document also covers topics like casual workers, out-workers, and overtime pay.
1.Distinguish between the direct and indirect labor cost
2. Understand the various facets of labor cost control
3. Understand the concepts like labor turnover, time keeping, time booking and idle and overtime
4. Know the various methods of remuneration including incentive plans
5. Understand the pay roll accounting and disbursement of wages.
1.Distinguish between the direct and indirect labor cost
2. Understand the various facets of labor cost control
3. Understand the concepts like labor turnover, time keeping, time booking and idle and overtime
4. Know the various methods of remuneration including incentive plans
5. Understand the pay roll accounting and disbursement of wages.
Cost Accounting-
-Meaning of Cost Accounting
-Scope of Cost Accounting
-Nature of Cost Accounting
-Relationship b/w Financial Accounting & Cost Accounting
-Cost Accounting v/s Management Accounting
-Objectives of cost accounting
-Function of cost accountant
-Essentials of cost accounting
-Advantages of cost accounting
-Limitations of cost accounting
-Role of cost in cost accounting
-Cost Unit & Cost Centre
-Cost Techniques
-Costing Systems
-Costing Methods
-Cost Classification
-Components of total cost
-Cost Sheet.
1. to understand the basic principles of Material Control
2. to study the procedures of Purchase, Storing and Issues
3. to acquaint with the latest techniques in inventory control
4. to understand the pricing of issues
Cost Volume Profit (CVP).
Introduction
Fixed costs
Variable costs
Semi variable costs
Contribution margin
Break even point
PV Ratio
BEP ANalysis.
break even point
Cost-volume-Profit.
Cost Accounting-
-Meaning of Cost Accounting
-Scope of Cost Accounting
-Nature of Cost Accounting
-Relationship b/w Financial Accounting & Cost Accounting
-Cost Accounting v/s Management Accounting
-Objectives of cost accounting
-Function of cost accountant
-Essentials of cost accounting
-Advantages of cost accounting
-Limitations of cost accounting
-Role of cost in cost accounting
-Cost Unit & Cost Centre
-Cost Techniques
-Costing Systems
-Costing Methods
-Cost Classification
-Components of total cost
-Cost Sheet.
1. to understand the basic principles of Material Control
2. to study the procedures of Purchase, Storing and Issues
3. to acquaint with the latest techniques in inventory control
4. to understand the pricing of issues
Cost Volume Profit (CVP).
Introduction
Fixed costs
Variable costs
Semi variable costs
Contribution margin
Break even point
PV Ratio
BEP ANalysis.
break even point
Cost-volume-Profit.
Costing labour cost -ECO 10- IGNOU
Labour
• This is the cost, incurred in the form of remuneration paid to the employees or labour of the organization. The workforce required to convert material into finished product is called labour. It can be direct or indirect.
• Direct Labour - The portion of wages and salaries which can be identified and charged to a single cost unit
• Indirect Labour - Cannot be directly related with the production of specific goods or service. Ex: Foreman, storekeeper, time keeeper etc
Labour :Time Rate -piece rate, Incentives meaning importance Taylor Differential piece rate-Halsey & rowan plans.Labour turnover meaning causes -effects-methods
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
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http://sandymillin.wordpress.com/iateflwebinar2024
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This webinar will introduce you to my framework, highlighting the key competencies I identified from my research. It will also show how anybody involved in language teaching (any language, not just English!), teacher training, managing schools or developing language learning materials can benefit from using the framework.
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This will be used as part of your Personal Professional Portfolio once graded.
Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
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This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
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June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
2. Labour cost
Human efforts used for conversion of materials
into finished products or doing various jobs in the
business are known as labour. Payment made
towards the labour is called labour cost. It can also
be direct and indirect.
3. Direct Labour: Direct labour is all labour expended and
directly involved in altering the condition, composition
or construction of the product. The wages paid to
skilled and unskilled workers for manual work or
mechanical work for operating machinery, which can
be specifically allocated to a particular unit of
production, is known as direct wages or direct labour
cost. Hence, 'direct wage' may be defined as the
measure of direct labour in terms of money. It is
specifically and conveniently traceable to the specific
products Wages paid to the goldsmith for making gold
ornament is an example of direct labour.
4. Example of direct labour
• Machine operator
• Shoe-maker
• Carpenter
• Weaver
• tailor
5. INDIRECT LABOUR
• Indirect Labour: Labour employed to perform
work incidental to production of goods or
those engaged for office work, selling and
distribution activities are known as 'indirect
labour'. The wages paid to such workers are
known as 'indirect wages' or indirect labour
cost.
• Example: Salary paid to the driver of the
delivery van used for distribution of the
product.
6. Example of indirect labour
• Supervisor
• Inspector
• Cleaner
• Clerk
• Peon
• watchman
7. Organisation for accounting and control of labour
cost
There are mainly five departments in an organisation
which deal with labour .
These are as follows:
Personnel department
Engineering department
Time-keeping department
Payroll department
cost accounting department
8. Labour Turnover
In all business organisation , it is a common
feature that some workers leave the
employment and new workers join in place of
those leaving .this change in work force is
known as labour turnover . Labour turnover
is this thus defined as ‘the rate of change in
the composition of the labour force in an
organisation.’ Labour turnover varies greatly
between different trades and industries .for
eg, where part-time and seasonal labour is
employed ,the rate will be higher.
9. Measurement of labour Turnover
To facilitate comparisons between different
periods and different undertakings , labour
turnover may be expressed in rate .
There are three alternative methods by
which this rate is computed .once a particular
method is used ,it should be consistently
followed for comparative analysis.
The methods are:
1-separation method:
10. Measurement of L T
2-Replacement method
3- Flux method
Separation method:This method takes in to
account only those workers who have left
during a particular period .its formula is:
LABOUR TURNOVER RATE=
NO.OF WORKERS LEFT DURING A PERIOD X100
AVERAGE NO. OF WORKERS DURING THE PERIOD
11. SEPRATION METHOD
AVERAGE NO. OF WORKERS=
NO.OF WORKERS IN THE BEGINNING. + NO.OF WORKER AT THE END
2
MULTIPLICATION BY 100 IN THE ABOVE FORMULA
INDICATES RATE IN PERCENTAGE.
12. REPLACEMENT METHOD
This method takes into account only those new
workers who have joined in place of those who
have left. Its formula is:
Labour turn over =
No. of workers replaced during the period
x100
Average no. of workers during the period
If new workers are engaged for expansion program or any
other such purpose, they are not considered for this
computation.
13. FLUX METHOD
This shows the total change in the
composition of labour force due to
separations and additions of workers .its
formula is:
Labour turnover rate =
No. of workers left + no. of workers replaced x 100
Average no. of workers
14. PRACTICAL PROBLEM
From the following data given by the personnel
department. calculate the labour turn over rate
by applying:
(a) Separation method
(b) Replacement method, and
(c) Flux method
No. of workers on the payroll:
At the beginning of the month 900
At the end of the month 1100
15. Practical
During the month 10 workers left, 40 persons were
discharged and 150 workers were recruited .Of
these , 25 workers are recruited in the vacancies of
those leaving while the rest were engaged for an
expansion scheme.
16. Casual worker
The casual or ‘badli’ workers are temporary
workers who are not in the regular payroll of the
factory .they are appointed on daily basis to
meet additional work load or to stand in for
absentee workers.
The appointment of casual workers is a very
common source of fraud in the payment of
wages .it is, therefore, very important to have
control over there appointments, their time of
work and their payment of wages.
17. Steps should be taken for
accounting and control of casual
workers
A)Full control regarding appointment and
discharge of such workers should be maintain.
B) The appointment of such workers should be
sanctioned by a competent executive.
C)Payment of wages should be made by a
person other than one who appointed them .
D)When they are appointed as indirect
Workers ,Time sheets should be issued to
them.
18. STEPS
E) when casual worker are employed at
site for some contract work ,surprise
visits should be paid to check their
number.
19. OUT- WORKERS
These are the workers who work out
side the factory premises on behalf of
the under taking known as out- workers.
out-workers are classified in to two
categories as given below:
A)Worker who work from their homes:
they are supplied with raw materials and
thy work either with their own tools or
tools supplied by the concern .such
worker are usually paid on piece basis .
20. CONTROL OVER SUCH WORKER
SHOULD BE EXERCISD IN THE
FOLLOWING MANNER
1)All materials supplied should be accounted
for and there should be no undue wear and
tear of tools supplied by the concern.
2) The work should be delivered within the
stipulated time.
3)The quality of finished work should be
carefully inspected.
21. (B)Workers sent to
site
Some workers may be sent to site or customers
premises for performing work. For example-
some companies supplying engineering
products provide after sales service and
workers sent to customers place when so
required. such out workers may while away
their time when they go out for work .job cards
should be issued to them so that labour cost of
work done can be ascertained.
22. Idle Time
Idle time represents time lost by workers who
are paid on time basis .when workers are paid
on time basis , some difference between the
time for which they are paid and that they
actually spend on production is bound to arise.
this difference is known as idle time. idle time
represents the time for which they are paid but
no production is obtained . For example : time
lost between factory gate and department, time
when production is interrupted by machine
maintenance ,tea breaks etc.
23. Causes idle time may occur owing to
productive, administrative or economic causes
1-Productive causes: The productive causes are those
which result in loss of production. These include:
(a)idle time due to machine break down.
(b)power failures.
(c)waiting for tools and /or raw materials.
(d) waiting for work
(e)waiting for instructions
Idle time due to productive causes is usually controllable
by proper planning, strict supervision and proper
maintenance of plant and machinery.
24. 2-Administrative causes
Idle time is sometimes caused by administrative
decisions .This usually happens during
depressions when some of machines have got
to work below normal capacity and regular
workers paid full amount of wages . This is
because the management does not want to
discharge trained workers temporarily. Such
abnormal idle time arises out of abnormal
situation and is generally not controllable.
25. 3-Economic causes
Idle time may also be caused by fall in the demand
of products , say due to sever competition
,seasonal nature of certain industries like woolen
goods, ice-cream ,etc. where production can not
be evenly distributed throughout the year. In such
cases it is not possible to get rid of workers during
slack season. Such surplus labour force is utilised
for doing some other jobs and if such
complementary jobs can not be found ,there will be
some idle time which is beyond control.
26. Treatment of idle time
From the point of view of treatment in cost accounts ,idle time
may be classified as normal and abnormal .
Normal idle time :This is that waste of time which we can
not stop because it is normal and employer has to pay
laborers for this idle time. For example :
a) Walking time from one department to other department.
b) Consuming time to start any job in factory.
c) Consuming time for fulfilling personal needs like drinking of
water, refreshment and rest.
d) Consuming time to set the machines.
27. Treatment of the Cost of
Normal Idle Time
1)-As overhead-It must be charged as indirect
expenses in factory. For example, if a laborer
gets Rs. 1 per hr and he spend 8 hrs in
factory and his total wage will be Rs. 8 but he
utilized his productive time 7 hrs, then direct
labor cost will be 8 hrs X Rs. 1 = Rs. 8 and 1hr
will be overhead of idle time and Rs. 1 per hr
idle time will be written in factory expenses in
cost sheet.
28. 2)-As direct wages
We can also increase the cost of labor rate.
with following way
If a labor works for 8 hrs, he gets = Rs. 1 per hr
If a labor works for 7 hrs, he gets = Rs. 1 / 8 X 7
= Rs. 1.14 per hr
Now labor cost will increase by 0.14 paise
29. Abnormal Idle Time
This is that wastage of time which we can stop
by good supervision.
a) waste of time due to inefficiency of
engineers.
b) Power failure
c) Delay of supply of material to factory
d) Strike and lockout
30. Treatment of the cost of Abnormal
Idle Time
Wage for abnormal idle time is loss of
business and it must be transferred to
costing profit and loss account.
31. Over time
Over time occurs when a worker works beyond
the normal working hours. The normal working
hours are laid down in the factories act.
Acordingly,any worker working for more than 9
hours per day or more or more than 48 hours
per week is entitled to over time payment..The
factories act also provides for payment of
overtime wages at double the normal rates of
wages .the overtime work therefore, a costly
affair and should be avoided as far as possible
.
32. Leave with pay
According to the factories act , workers are
entitled to annual leave with full pay for a
specified number of days in a year. This may
include casual leave , medical leave ,special
leave etc. The cost of paid leave can not be
charged to any work order or cost unit since no
work is done during this period .it is there fore
,treated as indirect labour cost and charged to
over head.
33. Leave with pay
Alternatively, leave wages may be treated as
direct labour cost in which case the wage
rate is inflated. This is done by estimating in
advance the amount of leave wages and
spreading it over the actual no. of working
hours to give an inflated hourly rate.
34. Holiday with pay
Workers are also entitled to certain holidays
like diwali,id, Republic day, independence
day etc. Like leave wages, payment of
these wages of holiday is also unproductive
in the sense that no production work is
done on these days. Payment for such
holidays should there fore be treated in the
same way as leave wages.
35. Worker's Remuneration:
The remuneration for labour is wages. The workers
put effort & get wages in exchange of that. On the
basis of pay scale & other allowances which are
prescribed in the terms of employment, calculation
of wages paid to direct or indirect workers is done.
By terms of agreement between the employees &
the employer, this may be modified from time to
time. On the basis of job evaluation, merit rating,
incentive plans, profit sharing & labour contract, the
wages for the workers are determined.
36. Features essential for a successful wage plan:
A successful wage plan should have the under mentioned essential features:
Fairness:
A wage plan which is based on scientific time & motion study becomes fair to both
employer & employee.
Minimum Wage guarantee:
Minimum wage guarantee must be given to the workers, whether under legal
compulsion or not. This minimum wage must be fairly above subsistence level of
income.
Link between effort & remuneration:
Unless there is a link between the value of work done & the remuneration payable,
there will be unfair to either the employer or the worker.
Satisfaction for the workers:
The worker must be satisfied by the wage plan which will result in high morale & low
labour turnover.
37. Work guarantee:
If there is payment by result, worker's earnings will not be satisfactory,
even if the rate is too high, unless continuous work is there, which is
available to them.
Conformity with legal provisions & trade agreements:
The wage plan should always be in accordance with any of the provisions
of law relating to the payment of wage & also there should not be any
violation of trade agreement.
Flexibility: The wage plan must be flexible & not rigid. In case of change
in situations, incorporation of some change may have to be there in the
wage plan also. Unlike rigid plan, modification can be made in the flexible
plan without much disturbance.
Cost of implementation: The wage plan cost of implementation must
be as low as possible
38. LABOUR COST
Methods of Remuneration (systems of wage payment)
There are two basic methods of labour remuneration:
(a) Time Rate System; and (b) Piece Rate System
Time Rate System
Under the time rate system, workers are paid according to the time for
which they work. Payment may be on hourly basis, daily basis or monthly
basis. In this system, no consideration is given to the quantity or quality of
work done. When payment is made on hourly basis, total wages payable
are calculated as follows:
Wages = No. of hours worked x Rate per hour
Piece Rate System
Wages under this system are paid according to the quantity of work done.
A rate is fixed per unit of production and wages are calculated by the
following formula:
Wages = Rate per unit x No. of units produced.
39. Various Incentive Plans
Straight Piece Rate Method
The method rewards employees based on their output. A fixed rate of wage
is paid for each unit produced, or number of operations completed or job
completed. The wages payable is calculated by multiplying the number of
pieces produced by the wage rate. There is generally a guaranteed hourly
rate for workers who are unable to attain the standard in order to pay the
minimum ‘day wages’.
Flat Time Rate Method
This method is used for paying remuneration to employees based on their
attendance. A fixed rate of wage is paid hourly, or daily, or weekly on the
basis of time spent on the shop floor (i.e. production department) in
production. The wages payable is calculated by multiplying the hours/days
spent in production by the hourly/daily wage rate.
40. •Halsey Premium Bonus Plan (Halsey Plan and Halsey-Weir Plan)
This plan was introduced by F A Halsey in 1891. It is a simple combination
of time and piece rate systems. A worker is paid a guaranteed base rate
and is rewarded when his performance exceeds standard. A standard time
is established in respect of each job or unit. Bonus is paid on the basis of
50% of time saved. The total wages payable is calculated as under:
= (Hourly rate X Time taken) + (50% X Time saved X Hourly rate)
As a result of increased productivity, conversion cost per unit falls. This is
because fixed overhead gets distributed over larger volume of output.
Thus, the firm finds it possible to reward workers directly in proportion to
production.
In the case of Halsey Weir plan, the percentage used is 30 instead of
50.
41. Rowan Premium Bonus Plan (Variable Sharing
plan)
A standard time is established in respect of each job
or process. There is a guaranteed base rate. A
bonus is paid on the basis of time saved computed
as a proportion of the time taken which the time
saved bears to the standard time. The total wages
payable is calculated as under:
= (hourly rate x time taken) + ( time saved x time taken) x hourly rate
time allowed
42. Taylor Differential Piece Rate Method
This system was introduced by F. W. Taylor, the father of Scientific
Management. The main features of this incentive plan are as follows:
1)Day wages are not guaranteed, i.e. it does not assure any minimum
amount of wages to workers.
2)A standard time for each job is set very carefully after time and
motion studies.
3)Two piece rates are set for each job- the lower rate and the higher
rate.
The lower piece rate is payable where a worker takes a longer time
than the standard time to complete the work.
Higher rate is payable when a worker completes the work within the
standard time.
In other words, lower piece rate is payable to inefficient workers and
higher piece rate is payable to efficient workers. It will be seen that
there is a great difference between the wages of an efficient and an
inefficient worker.
43. Problem 1
You are presented with the following information by Olympia
Engineering Company related to the first week of December
1999.
The firm employs 5 workers at an early rate of 2. During the
week, they worked for 4 days for a total period of 40 hours
each and completed a job for which the standard time was
48 hours for each worker. Calculate the labour cost under the
Halsey method and Rowan method of incentive plan
payments.
44. Solution of Problem # 1
Hasley Method = (Hourly rate x Time taken) + (50% x Time Saved x Hourly rate)
= (10 x 40) + (0.5 x 8 x 10)
= 440
Rowan Method = (Hourly rate x Time taken) + (Time Saved x Time Taken) x Hourly Rate
Time Allowed
= (10 x 40) + (8 x 40) x 10
48
= 467
45. Problem 2
A worker is allowed 10 hours to complete a job on daily
wages. He takes 6 hours to complete the job under a scheme
of payment by results. His day rate is Rs. 6 per hour and piece
rate is Rs. 36. The material cost of the product is Rs.40 and
the overheads are charged at 150% of the total direct wages.
Calculate the factory cost of the product under
i) Piece work plan
ii) Rowan Plan
iii) Halsey plan
46. Solution of Problem # 2
Price Rate System = Rate per Unit x No. of Units produced
= 6 x 6
= 36
Rowan Method = (Hourly rate x Time taken) + (Time Saved x Time Taken) x Hourly Rate
Time Allowed
= (6 x 6) + (4 x 6) x 6
10
= 50.40
Hasley Method = (Hourly rate x Time taken) + (50% x Time Saved x Hourly rate)
= (6 x 6) + (0.5 x 4 x 6)
= 48
47. Problem 3
From the following particulars calculate wages earned by
workers A and B respectively under Taylors System:
Standard time allowed 10 units per hour
Normal wage rate Rs. 1 per hour
Differential rates to be applied:
90% of piece rate when below standard efficiency
125% of piece rate when at or above standard production
on a day of 8 hours
A – 75 units
B -85 units
48. Solution of Problem # 3
Unit rate= 1/10 =0.1 Rs/ unit
Below efficiency Rate = 0.10 = 0.10*0.9 = 0.09 Rs/unit.
Above efficiency Rate = 0.10 = 0.10*1.25 = 0.125 Rs/unit.
Worker A:-
Produced unit = 75
Therefore, wage= 75*0.090 = 6.75Rs (ANS)
Worker B:-
Produced Unit = 85
Therefore, wage= 85*0.125 = 10.625 ~ 10.63Rs (ANS)