This method is also called the time rate system.
Under this system, wages are paid to workers on a time basis.
It is not related to output.
It may be paid on an hourly, daily, weekly or monthly basis.
This system is applied where:
Quality of work is more important than the volume
The measure of work is indirect labour basis.
Work demands a high degree of skill.
Production involves delay and interruption due to another factor.
Formulas of total wage
Total wage 
= Daily working hours x Wage rate per hour 

= Daily working hours x Numbers of days x Wage rate per hour 
The main advantages of the time rate system are:
This process is simple and easy to understand.
It is more useful where quality products are manufactured.
It is useful to fresher or unskilled workers because minimum wages are allowed.
This method is favoured by trade union because workers are paid an equal wage.
The main disadvantages of the time rate system are:
Production is low because there is no relation between input and output.
No differences between skilled and unskilled workers; skilled workers frustrated because the wage is the same.
Labour cost per unit is difficult to set in advance.
Workers are paid wages for idle time; it is not good for the company.
It encourages a tendency to do overtime.
Strict supervision is required to get work from workers.
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Cost Sheet, Unit Costing 

Cost Reconciliation Statement 
#####
Most of the company provides its employees extra benefits to encourage them.
There are two types of benefits or expenses.
One is monetary and the other is a nonmonetary expense.
Monetary expenses are paid in cash but nonmonetary expenses are not paid in cash.
Monetary benefits 
Nonmonetary (nonpecuniary) Benefits 
Pecuniary benefits 
Medical facilities 
Wages and salaries 
Entertainment 
Dearness allowance 
Educational 
Home allowance or house rent allowance 
Training facilities 
Overtime pay 
Subsidized canteen facilities 
Holiday and vacation pay 
Subsidized transportation 
An incentive for targeted/ standard production 
Subsidized housing 
Profitsharing bonus etc. 
Recreation and sports facilities 
Deferred monetary benefits 
Leave facilities etc. 
Contribution for provident fund 

Contribution for group insurance 

Contribution for pension fund etc. 

Keep in Mind (KIM)
There are other some special allowances and incentives such as chairman allowance, audit allowance and night shift allowance etc. 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1A
The following information is provided:
Working hour per day 
8 hours 
Hourly wage rate 
Rs 30 per hour 
Working days per month 
25 days 
Required: (1) Worked hours for the month; (2) Total wages for the month by using time wage system
[Answer: (1) 200 hours; (2) Rs 6,000]
SOLUTION:
Worked time 
= 25 days x 8 hours 

= 200 hours 


Total wages 
= Worked hours x Wage rate per hour 

= 200 hours x Rs 30 

= Rs 6,000 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1B
Extracted data are taken from ABC Manufacturing Company:
Prefixed wage rate per hour 
Rs 28 
Working hour per day 
8 hours 
Working days in a month 
25 days 
Required: Total wage during a month
[Answer: Rs 5,600]
SOLUTION
Total wage 
= Daily working hours x Numbers of days x Wage rate per hour 

= 8 hours x 25 days x Rs 28 

= Rs 5,600 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1C
Extracted data are taken from a contractor:
Wage rate per day (of 8 hours) Rs 180
Average working days in a month 25 days
Required: (1) Total wages during a month; (2) Wage rate per hour
[Answer: (1) Total wages = Rs 4,500; (2) WRPH = Rs 22.50]
Solution:
Total wages during a month 

Total wage 
= 
No. of working days x Wages rate per day 

= 
25 days x Rs 180 

= 
Rs 4,500 
Wage rate per hour (WRPH)
WRPH = Rs 180 per day ÷ 8 hours per day = Rs 22.50
When a worker does more work than a standard work hour, it is known as overtime.
Suppose, standard time per day is 8 hour and a worker works for 10 hours; in this condition, overtime is 2 hours (10 – 8).
Somewhere, the company pays double (200%) wages amount for overtime; somewhere equal (100%); somewhere 75% and somewhere 50%.
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1D
The following extracted information of a worker is given to you:
Days 
Sun 
Mon 
Tue 
Wed 
Thu 
Fri 
Sat 
Worked hours 
10 
8 
9 
12 
11 
6 
Off 
Wages rate per hour is Rs 40. Daily working hours are 8 hours. The overtime wage rate is Rs 30 per hour, which is 75% of the standard rate.
Required: (a) Total wages during a week; (b) Wage rate per hour including overtime
[Answer: (a) Total wages = Rs 2,140; (b) WRPH = Rs 38.21]
Solution:
Given and working note:
Days 
Worked hours 
Normal working hours 
Overtime 
Sunday 
10 
8 
2 
Monday 
8 
8 
– 
Tuesday 
9 
8 
1 
Wednesday 
12 
8 
4 
Thursday 
11 
8 
3 
Friday 
6 
6 
– 
Saturday 
Holiday 
Holiday 
− 
Total 
56 hours 
46 hours 
10 hours 
Now,
Total wages during a week 

Total wages 
= 
Normal wages 
+ 
Overtime wages 

= 
(46 hours x Rs 40) 
+ 
(10 hours x Rs 30) 

= 
Rs 1,840 
+ 
Rs 300 

= 
Rs 2,140 


Wage rate per hour including overtime
WRHP = Total wages ÷ Worked hours = Rs 2,140 ÷ 56 hours = 38.21
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1E
The pay roll sheet of worker Manoj has the following working hours:
Days 
Sun 
Mon 
Tue 
Wed 
Thu 
Fri 
Sat 
Worked hours 
Off 
10 
8 
9 
11 
12 
7 
Wages rate per hour is Rs 30. Daily working hours are 8 hours. Overtime is paid 1.5 times of normal wage.
Required: (a) Total wages during a week; (b) Wage rate per hour including overtime
[Answer: (a) Rs 1,860; (b) Rs 32.63]
SOLUTION
Given and working note:
Days 
Worked hours 
Normal working hours 
Overtime 
Sunday 
– 
Holiday 
– 
Monday 
10 
8 
2 
Tuesday 
8 
8 
– 
Wednesday 
9 
8 
1 
Thursday 
11 
8 
3 
Friday 
12 
8 
4 
Saturday 
7 
7 
– 
Total in hours 
57 
47 
10 
Now,
Total wages during a week 

Total wages 
= 
Normal wages 
+ 
Overtime wages 

= 
(47 hours x Rs 30) 
+ 
(10 hours x Rs 30 x 1.5) 

= 
Rs 1,410 
+ 
Rs 450 

= 
Rs 1,860 


Wage rate per hour including overtime
= Total wages ÷ Worked hours
= Rs 1,860 ÷ 57 hours
= Rs 32.63
When wages or total wages is given in the question, students are required to find out daily working hours, worked days or wage rate per hour.
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1F
The following labour costing information of a factory is provided to you:
Total weekly wages 
Rs 2,880 
No. of days worked 
6 days 
Wage rate per hour 
Rs 60 
Required: Daily working hours
[Answer: Daily working hours = 8 hours]
SOLUTION:
Given and working note:
Total weekly wage = Rs 2,880
No. of worked days = 6 days
Wage rate per hour (WRPH) = Rs 60
Now,
Total wages 
= 
Daily working hours x Worked days x WRPH 
Rs 2,880 
= 
Daily working hours x 6 days x Rs 60 
2,880 
= 
Daily working hours x 360 
Daily working hours 
= 
2,880 ÷ 360 

= 
8 hour 
#####
PROBLEMS AND ANSWERS OF TIME WAGE SYSTEM 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1A
The following extracted information is provided:
Working hour per day 
8 hours 

Hourly wage rate 
Rs 45 

Working days per month 
24 days 

Required: Total worked hours and wages for the month by using the time wage system
[Answer: Worked hours = 192 hours; Total wage = Rs 8,640]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1B
A worker worked in a factory for 8 hours a day. His hourly wage rate is Rs 35. The number of working days in a month is 25 days.
Required: (a) Total worked hours for the month; (b) Total wages for the month
[Answer: Worked hours = 200 hours; Wages = Rs 7,000]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1C
Mohan worked in a factory for 8 hours a day. His hourly wage rate is Rs 55. The number of working days in a month is 24 days.
Required: (a) Total worked hours for the month; (b) Total wages for the month
[Answer: Worked hours = 192 hours; Wages = Rs 10,560]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1D
The following labour costing information of a factory is provided to you:
Total weekly wages 
Rs 3,300 

No. of days worked 
6 days 

Wage rate per hour 
Rs 50 

Required: Daily working hours
[Answer: Daily working hours = 11 hours]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1E
The total wage earned by a worker for a month of 24 working days is Rs 9,600. The working hour for a day is 8 hours.
Required: Wage rate per hour
[Answer: WRPH = Rs 50]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1F
AH Manufacturing Enterprise provides the following information for a month:
Daily working hours 
8 hours 

Wage earned in January 
Rs 13,520 

Wage rate per hour 
Rs 65 

Required: Working days for the month
[Answer: Working days = 26]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 1G
The time card shows that a worker worked for 64 hours in a week. 6 working days are in a week. The normal time for a day is 8 hours and the normal rate of wage is Rs 40 per hour whereas the overtime rate is 1.5 times of normal time rate.
Required: Wage earned of the worker
[Answer: Total wage = Rs 2,880; *Overtime (64 – 48) = 16 hours]
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