Halsey Premium and Rowan Plan (Comparison)

yourarticlelibrary.com/cost-accounting/wages-cost-accounting/halsey-premium-and-rowan-plan-
comparison/57688

June 8, 2015

ADVERTISEMENTS:

Since under the Halsey Plan 50% of the wages of the time saved are to be paid to the
worker as bonus, the two systems will yield equal wages if a worker saves exactly half the
time set for him. (The student is advised to work out the above example with actual time
as five hours). If a worker saves less than half the time as in the above example, he will
be better off under the Rowan Plan. But if he saves more than half the time, he will earn
more under the Halsey Plan.

Thus, if in the above illustration the actual time taken is only 3 hours, the earnings
of the worker under the Halsey Plan will be:

3 x 2.00 + 7 x 2.00 x 50/100 or Rs. 13.00

ADVERTISEMENTS:

and the earnings under the Rowan Plan will be

3 x 2.00 + 7/10 x 3 x 2.00 or Rs. 10.20 10

To take an impossible case, if actual time is zero hours, the worker will get no wages
under the Rowan Plan but will get wages for time saved in the above example, under the
Halsey Plan. It is impossible for a worker to double his wages under the Rowan Plan. An
improvement on Rowan Plan is to calculate the bonus as that proportion of the time
saved which time saved bears to the standard time.

The earnings will then be:

Illustration 1:

Standard time allowed for a job is 50 hours. The hourly rate of wage is Rs. 2.00 per hour
plus a dearness allowance @ Rs. 2.50 per hour worked.

The actual time taken by the worker was 40 hours.

Calculate total wages on:

ADVERTISEMENTS:

(1) Time basis; (2) Piece basis; (3) Halsey plan; (4) Rowan’s plan.

1/3
Illustration 2:

The following information relates to the week ending 25th November, 2004 for two
workers A and B:

Bonus is paid @ 2/3 of basic rate for all time saved and for all output without any
deduction for rejected output. The basic week is 42 hours, the first 6 hours of overtime
being paid at time plus 1/3 and the next six hours at time plus one-half.

2/3
Using the information given above, present in tabulated summary form for each
employee:

(a) Number of bonus hours earned and amount of hours earned;

(b) Basic wages including overtime premium and gross wages; and

ADVERTISEMENTS:

(c) Direct wages cost per dozen of the finished output (nearest paise) when overtime is
worked: (i) regularly throughout the year as company policy due to labour shortage, and
(ii) specifically at the customer’s request to expedite delivery.

3/3