Question

For a work order, standard time and time taken are 20 hours and 15 hours respectively. Time rate being Rs. 2 per hour, total wages payable under Rowan's premium plan will be ________.

• A. 40
• B. 37.5
• C. 35
• D. None of the Above

Answer 1

The correct option is B 37.5

Rowan's Premium plan is an incentive plan. In this plan, there is a guarantee of minimum wages with the time rate but an incentive can be claimed on the basis of time saved by the worker.

In the given case, wages is calculated as:

Standard time:20 hrs

Actual Time:15 hrs

Time saved:5 hrs

Wage rate:Rs. per hour

Wages = Wage rate*Actual time + (Actual Time/Standard Time*Time saved*Rate per hour)

=(Rs.2*15)+ (Actual Time/Standard Time*Time saved*Rate per hour)

=30+ (15/20*5*2)

=30+7.50

Total wages payable would be Rs.37.50