Accounting for Labour

Introduction
 Labour cost is one of the important elements
of production. Wages, salaries and other
incentives of employee remuneration
constitute a very large component of
operating costs.
 Remuneration of employees is a vital factor
not only affecting the cost of production but
also industrial relations of the organisation.
 Introduction
 No organization can expect to attract and attain qualified
and motivated employees unless it pays them fair
remuneration.
 Employee remuneration therefore influences the growth
and profitability of the company.
 For employees, remuneration is more than a means of
satisfying their physical needs. Wages and salaries have
significant influence on distribution of income,
consumption, savings, employment and prices.
 Thus. employee remuneration is a very significant issue
from the viewpoint of employers, employees and the
nation as whole.
Objectives of an ideal Wage
system
An ideal wage system is required to achieve the following
objectives:
The wage system should establish a fair and equitable

remuneration.
A sound wage system helps to attract qualified and efficient

worker by ensuring an adequate payment.

It assists to improve the motivation and moral of employees

which in turn lead to higher productivity.

It enables effective control of labour cost.

An Ideal wage system helps to improve union-management

relations. It should reduce grievances arising out of wage

inequities.
Principles of an Ideal Wage System

The following principles should be adopted for an ideal wage system:

Differences in pay should be based on differences in job requirements.

Follow the principle of equal pay for equal work.

The scheme should be based on work study, and the work contents of

various jobs should be stabilized.

Recognize individual differences in ability and contributions.

The scheme should not be very costly in operation.

The scheme should be flexible.

The scheme should encourage productivity.

The scheme should not undermine co-operation amongst the workers.

The scheme should be sufficient to ensure for the worker and his family

reasonable standard of living.

Remuneration and Fringe
Benefit compared
 Remuneration refers to that which is
regularly paid including basic wages,
overtime, various allowances and
bonus.
 Fringe benefits are those which are
not paid regularly including subsistence
allowances, training costs and medical
allowances.
Labour cost
 Can be classified into:
Direct
Indirect
Direct labour cost
 The portion of wages and salaries which
can be identified and charged to a
single unit cost
 For example, wages paid to the workers
engaged in machining department,
fabrication department, assembling
department, etc
Indirect labour cost
 Cannot be directly related with the
production of specific goods or service
 Foreman, storekeeper, clerical staff etc.
are examples of indirect labour cost
Recording of labor

 The personal department is responsible

for recruitment of employees and
maintenance of proper records with
respect to employees.
Recording of labor
The department prepares personnel
record card or file. The file is used to
keep details of employees such as;
 Full name and qualifications
 Position and type of work
 Starting date
 Starting salary, etc
Recording of labor
 Four records are important for recording
attendance time and records for
operations showing time taken and
output produced.
 The four records are:
 Clock cards

 Time sheet

 Job cards or job tickets

 Piecework tickets
Method of remuneration
There are two basic methods of wage
payment:
Time wage system

Piece work wage system

Time Wage System
 wages are paid on the basis of time spent on
the job irrespective of the amount of work
done.
 The wages is measured on the basis of unit
of time i.e. hourly, daily, weekly or monthly
 The formula is as follows:
Earnings = Hours worked * rate per hour
Piece Wage System
 Under piece wage system,
remuneration is based on the amount of
work done or output of a worker.
 This is known as "Piece Rate System" or
"Payment by Result."
 Thus. a workman is paid in direct
proportion to his output.
Premium and bonus plans
 A variety of bonus and premium plans
have been designed to overcome the
drawbacks of two basic methods of
wage payments.
 A system of incentive plans also takes
into consideration the primary principles
of these two basic plans known as
Incentive or Bonus or Premium Plan.
Methods of Remuneration
 The following are the important methods
of remuneration which may be grouped
into;
 Time Rate Systems

 Piece Rate Systems

 Bonus System (or) Incentives

Schemes.
 Indirect Monetary Incentives.
Methods of Remuneration
 These may be further classified as
under:
Time Rate Systems:

 At Ordinary Levels
 At High Wage Levels

 Guaranteed Time Rates.

Methods of Remuneration
 Piece Rate Systems:
 Straight Piece Rate

 Piece Rates with Guaranteed Time

Rate
 Differential Piece Rates:
Taylor's Differential Piece Rate System
Merrick Differential Piece Rate System

Gantt Task and Bonus Plan.

Bonus System or Incentive
Scheme
This includes the following;
 Halsey Premium Plan

 Halsey-Weir Premium Plan

 Rowan Plan

 Barth Variable Sharing Plan

 Emerson Efficiency Plan

 Bedaux Point Premium System

 Accelerating Premium Plan

 Group or Collective Bonus Plans.

Comparison between time rate
and piece rate system
 Time Wage System
 Time Rate at Ordinary Levels: This is also
termed as "Day Wage System" or "Flat Rate
System."
 Under this system, wages are paid to the
workers on the basis of time spent on the
job irrespective of the quantity of work
produced by the workers.
 Payment can be made at a rate per day or a
week, a fortnight or a month.
Time Wage System
 The formula for calculation of payment
of time rate of ordinary levels is as
follows:
Remuneration or Earnings =

Hours Worked X Rate Per Hour

 Time rate is suitable where
 The quality of work is more important than
quantity
 The nature of work is such that it is difficult
to measure e.g. cleaners, supervisors
 The work is not repetitive in nature
 The volume of production is not within the
control of workers
 Where machinery and materials used are
very sophisticated and expensive.
 Where the workers are new and learning the
job
 Advantages
 It is simple and easy to calculate
 It provides a regular and stable income to
the worker.
 It avoids many complex negotiations in case
of most of the incentive schemes
 Quality of the work is not affected.
 This method also avoids inefficient handling
of materials and tools.
Disadvantages
 This leaves no incentive for an efficient
worker. An inefficient as well as
efficient workers are paid the same
wages under this method
 In absence of incentives schemes, a
stricter supervision becomes necessary
for ensuring the required level of output
from the workers
Disadvantages
 Since the workers are certain about
their wages they may consume more
time for producing the same quantity. It
means a higher level of labour cost and
a higher level of overhead
 Time rate at High Levels
 Under this method, employees are paid a high
hourly wage rate than the rate paid at different
organizations in the industry or region expecting
that the workers will work more efficiently.
 To implement this method, the efficient, skilled
and, experienced workers are selected expecting an
efficient and hard work from them in expectation of
that the organization will pay wages at higher rates
than prevailing in the industry.
Example 1
 For example, the normal wage rate
prevailing in the other similar
companies is Tshs. 12 per hour, X Ltd.
has adopted high day rate of Tshs. 15
per hour. Assume the worker worked
for 40 hours, what will be his wage?
 Guaranteed Time Rates
 Under this method, the employee is
assured of agreed level of wages for the
specified level of performance.
 The first component is of fixed nature
depending on the time spent the wages
are paid and the other part is variable in
nature linked to merit rating and cost of
living.
 Guaranteed Time Rates
 the wage rate is calculated by considering changes
in cost of living index.
 The wage rate is varied for each worker according to
the change in cost of living index.
 This system is suitable during the period of raising
prices, but
 The main disadvantage in this method is that it is
more complicated in computation of wages and it is
not popular.
Remuneration on piece work
 This is also known as "Piece Wage
System" or "Payment By Result."
 Under this system, wages are paid on
the basis of production
 The formula is as follows:
Earnings = number of unit produced * rate
per unit
Example
 If a worker is paid Tshs.1,500 per unit
and he produces 20 units in 7 hours the
total wages will be calculated as
20*Tshs.1,500 = Tshs.30,000
 Advantages

• It facilitates direct relation between efforts and

reward.
• This system encourages the efficient workers to
increase production.
• Under this system efficient workers are recognized
and rewarded.
• It helps to reduce the cost of supervision and idle
time.
 Disadvantages
 The quality of work may deteriorate
 The overwork on the part of workers is likely
to result in ill-health
 This may not be fair when the production is
halted because of shortage of materials,
machinery breakdown
 More rigid control may be needed and then
increase cost of supervision
 Piece rate system is suitable
where:
 The amount of work can easily be
determined and measured
 The nature of work is repetitive
 The productivity is closely linked to the
skill and effort of the worker
 Quality and workmanship are not
important.
 Piece rate Payment Method
There are three important methods of paying
labor remuneration falling under this type;
 Straight piece rate system
 Differential piece rate system and
 piece rate with Guaranteed Time Rates
 Straight piece rate system
 Payment is made as per the number of units
produced at a fixed rate per unit.
 Thus, total earnings of each worker is
calculated on the basis of his output
irrespective of the time taken by him
 The following formula is used for measuring
piece work earning:
Straight Piece Work Earnings = Units
Produced x Rate Per Unit
 Piece Rates with Guaranteed
Time rates:
 Under this method, the worker earning from
piece work less than the guaranteed
minimum wage, will get the fixed amount of
guaranteed time rate
 A guaranteed rate would be paid per hour
rate or day rate or week rate.
 Differential Piece Rates:
 This system is designed to provide for
variation of piece rates at different levels of
output.
 Accordingly increase in wages is
proportionate to increase in output.
 Under this system, efficient workers get
ample reward and at the same time
inefficient workers are motivated to earn
more.
Differential Piece Rates
 The following are the three important
types of differential piece rates :
 Taylor's Differential Piece Rates

System.
 Merrick's Differential Piece Rates

System.
 Gantt Task Bonus Plan.
Taylor’s differential piece rate
system
 This system encourage the workers to
complete the work within or less than
the standard time.
Taylor’s differential piece rate
system
 Taylor advocated two piece rates, so
that if a worker performs the work
within or less than the standard time,
he is paid a higher piece rate and if he
does not complete the work within the
standard time, he is given a lower piece
rate.
Example
 Calculate the earnings of workers A and B
under Straight Piece-rate System and
Taylor’s Differential Piece-rate System form
the following particulars.
 Normal rate per hour = Tzs 1,080
Standard time per unit = 20 seconds
 In a day of 8 hrs A produces 1,300 units
per day and B produces 1,500 units per
day.
Example
• Differentials to be applied are as follows
 80% of Piece rate below standard.

 120% of Piece rate at or above

standard.
Merrick’s Multiple Piece Rate
System
 This method seeks to make an
improvement in the Taylor’s differential
piece rate system.
 Under this method, three piece rates
are applied for workers with different
levels of performance.
Merrick’s Multiple Piece Rate
System
 Wages are paid at ordinary piece rate to those
workers whose performance is less than 83% of the
standard output,
 110% of the ordinary piece rate is given to workers
whose level of performance is between 83% and
100% of the standard
 120% of the ordinary piece rate is given to workers
who produce more than 100% of the standard
output.
Merrick’s Multiple Piece Rate
System
 Example
 Calculate the earnings of workers A, B and C
under straight piece rate system and
Merrick’s multiple piece rate system from the
following particulars; Normal rate per hour
Tzs 108, Standard time per unit 1 minute
 Output per day is as follows:
Worker A : 384 units Worker B : 450 units
Worker C : 552 units
 Wording hours per day are 8
 Gantt’s Task Bonus Plan
 This system is designed by Henry L. Gantt.
 Under this system, standard time for every
task is fixed through time and motion study.
 The main feature of this system is a good
combination of time rate, differential piece
rate and bonus.
Gantt’s Task Bonus Plan
 In this system day wages are
guaranteed to all workers. Wages under
this system are calculated as follows :
 Example
From the following particulars, calculate total
earnings of each worker under Gantt's Task
Bonus Scheme:
Time rate is Tshs 10 per hour for 40 hours,

Standard production per week is 40 units,

piece work rate above standard is Tshs. 12
per unit
Actual production during the month :

A- 32 units, B- 40 units, c- 42 units

We will continue next week
Premium bonus plan
 It is to pay to the workers a basic time
rate plus a portion of the wages
equivalent of the time saved as related
to the agreed/allowed time for the work
 Bonus or Incentives Schemes
• Incentive schemes of wage payment are also known as Premium
Bonus Plans. introduced in order to increase production with ensuring
proper industrial climate. Wage incentive plans may be of two types :
–Individual Incentive Plans and

–Group Incentive Plans.

• Under individual incentive plans, remuneration can be measured on the

performance of the individual worker.
• In the case of the group incentive scheme earnings can be measured
on the basis of the productivity of the group of workers or entire work
force of the organization.
• Various types of incentive schemes are combinations of time and piece
rate systems.
• The following are the important individual incentive plans discussed
below:
Types of premium bonus
scheme
 There are three premium bonus
scheme;
Halsey scheme;

Halsey-Weir scheme; and

Rowan scheme
Halsey 50% Bonus Scheme
 If the job is completely in less than the
standard time prescribed, worker is paid a
bonus of 50% of the time saved computed
on the basis of the prescribed time rate, in
addition to the normal time wage.
Earnings = Time Wages + Bonus
= (hours worked * hourly rate)+1/2 (time allowed –
time taken)*hourly rate
 Example
 If a factory the normal hourly rate is
Tshs.5,000. Time allowed for job is 10
hours. Mr Frank takes 8 hours to complete
the job
 His total earnings will be calculated as:
Earnings = 8*5,000+1/2(10-
8)*5,000=Tshs.45,000
Advantages
 The bonus encourages the workers to save as much
time as possible because the higher the saving of
time, the higher is the bonus
 Morale may be improved if extra effort is reward
 Both the firm and the employee should benefit from
the introduction of an incentive scheme. Employees
should receive an increase in wages arising from the
increased production. The firm should benefit from a
reduction of fixed overhead per unit
Disadvantages
 Incentive schemes can be complex and
difficult to administer
 Establishing performance levels leads to
frequent and continuing disputes
 The quality of the output may decline
 Halsey-Weir plan
 Under this system, the worker gets the
bonus of ⅓ or 33⅓% of the time saved
instead of 50% of time saved under Halsey
Plan.
 Except for this, Halsey Plan and Halsey-
Weir Systems are similar in all other
respects.
 Example
 If a factory the normal hourly rate is
Tshs.5,000. Time allowed for job is 10
hours. Mr Frank takes 8 hours to complete
the job
 His total earnings will be calculated as:
Earnings = 8*5,000+1/3(10-
8)*5,000=Tshs.41,667
 Rowan Bonus Scheme
 This scheme was introduced in 1901 by David
Rowan of Glasgow, U.K.
 It is almost similar to Halsey Premium scheme with
the exception that time saved is shared in the ratio
of Time Saved/Time Allowed.
 Here also, standard time allowed is fixed for a job.
If the worker can save time, he shares this with the
employer.
 Total Wages (W) = TT*R + [(TA-TT)/TA*TT*R]
 Where: TT-Time Taken, R- Rate per hour, TA- time
Allowed
Example
 Using the following data, calculate the
wages payable to workman under
Rowan premium bonus plan
Time allowed: 48 hours
Time Taken: 40 hours

Rate per hour Tshs. 1,000

 Differences & Comparisons
Advantages
Hasley premium Plan •Simple
•Beneficial for efficient worker
•Causes no harm to trainee,
new or slow worker
•Benefits sharing
•Minimum base-wage
guaranteed
Rowlan Plan •Checks over-speeding
overstrain by workers
•Assured minimum base-wage
•Efficiency is rewarded
Disadvantages
•Workers get a small percentage of
return over their achievement
•Quality may suffer due to over-
achievement
•Management gets a wrong picture of
worker’s ability
•Discourages workers to over-achieve
•Difficulty in ascertaining wages as it
requires large data processing
•Sharing of profit for over-achievement
may not be liked by workers
 Non-Monetary Incentive
Schemes
 Under this system, employees are provided
better facilities, instead of additional
monetary payments.
 Some of the examples of non-monetary
incentives are free education for children,
rent free accommodation, medical facilities,
canteen facilities, welfare facilities, and
entertainment facilities etc.
 IDLE TIME AND OVERTIME
• Idle time refers to that portion of hours paid which are not utilized for
productive purposes.
• This is reflected in the time card as the hours not booked in job or work
order, and during which time the worker remains idle.
• Idle time can be classified under normal and abnormal idle time.
Normal idle time represents inevitable loss of labour hours arising out
of the following situations:
–Time lost between factory gate and place of work, tea break, lunch

break, etc.
–Time lost in setting the machine, tools, change-over from one job to

another, fatigue, etc.

–Time lost in power-failure, machine breakdown, waiting for material,

etc.
 Idle time
• Out of the above causes, some are inherent in the process
and controllable to a great extent.
• While time lost due to external causes such as general
power-failure are uncontrollable in the hands of the
management. Thus, it is possible to identify normal idle
time, and any loss of time beyond the normal allowed hours
shall be called abnormal idle time, such as:
–Excessive machine-breakdown.
–Excessive internal power failure.

–Excessive waiting time for material, instructions, etc.

– Too much time to rectify defectives.

–Strike, lockout, fire, floods, etc.

 Idle time can be controlled by adopting
the following measures :–
 Preparation and analysis of labour utilisation
report with breakdown of idle time.
 Minimising machine breakdown by adopting
preventive maintenance.
 Proper material and production planning,
and follow-up system.
 Timely purchase of materials and
components.
 Accounting of Idle Time
• Normal idle time of all workers should be collected under
standing order number and charged to factory overheads.
However, some of the normal idle time of direct workers,
which are associated with the job or work order, such as,
time taken for machine setting, change-over or tool setting,
can be added to the product cost as direct wages by
inflating the hourly rate of wages.
• Abnormal idle time cost shall be collected as per standing
order numbers or accounts code numbers and shall be
charged to costing profit and loss account. Under no
circumstances, abnormal idle time can be charged to
product-cost.
 Example
I. A factory employs four individuals A, B, C and D. Worker A is supervisor
for other workers. Therefore, A is not direct worker. The particulars of
the workers labour hours for the week just ended and respective rates
as follows;
WORKER TOTAL HOURS WORKED RATE PER HOUR JOB TICKET HOUR
A 56 300 NIL
B 50 240 40
C 56 210 42
D 54 200 48
I. Required;
I. Compute the Gross pay of the worker
II. Analyze labour hours into direct and idle time hours
III. Analyze Gross pay into direct and indirect cost
 Overtime
• The control of overtime is very important, because of its
tendency to increase and to become a normal practice for
earning extra money. It has harmful effect on the health
and morale of the workers, besides unfavourable effect on
productivity. It may also lead to high absenteeism.
• The overtime hours should, therefore, be controlled
rigorously. Except for unavoidable reasons, overtime work
should not be allowed. Sanctioned overtime work should
be supervised properly to ensure full utilisation of time.
Daily or weekly overtime report should be reviewed by
higher management.
 Overtime
• Overtime is normally paid at a rate higher than
normal wages. Usually, it is one and half or double
the normal wage-rate.
• The extra amount over the normal wage-rate is
called overtime premium. Normal wages form part
of direct labour cost. The charging of overtime
premium needs consideration of the circumstances
under which overtime was undertaken, and
accordingly, the standing order number will be
debited
 Accounting of Overtime
Premium
 If overtime is paid to complete a job at the request
of the customer, overtime premium is charged to
the job order concerned.
 If overtime is undertaken in order to cope up with
increased production, overtime premium is treated
as factory overheads. Alternative method is to
distribute the overhead premium over all the jobs
undertaken during normal as well as overtime hours
at an average rate
 Accounting of Overtime
Premium
 If overtime is paid for any capital order, such as,
fabrication of a machine to be used internally, the
overtime premium shall be charged to capital
work order account.
 If overtime is worked to recover production loss
due to abnormal conditions such as, strike, lock
out, flood, etc., the premium should be charged to
costing profit and loss account.
 Overtime work should be controlled
in the following ways
 No overtime work shall be allowed without prior
authorization.
 If overtime is unavoidable, then it should be planned in
advance, and actual overtime hours should be compared
against plan.
 Overtime hours with normal working hours should be
reported daily. A monthly overtime report showing overtime
hours, and cost compared to the previous month as well as
plan should be submitted to higher authority
 Cost of overtime work vis-a-vis recruitment of additional
worker should be reviewed periodically
Example
 If the basic day rate is Tshs. 4,000 per
hour and overtime is paid at time and a
quarter, what will be the earnings if the
worker works for 8 hours of overtime?
Payroll Accounting
 Payroll accounting is the computation of the
gross pay for each employee and calculation of
payments
to be made to employees, government, pension
funds, etc.

 It's a fact of business–if a company has

employees, it has to account for payroll and fringe
benefits.
 Payroll data is used in
financial recordkeeping for:
 General Accounting – record transactions in
company’s books and prepare financial
statements (internal & external)
 Cost Accounting – cost of labor (regional,
departmental, etc)

 Budgeting – projecting costs to keep within

limits
Payroll and Benefits
 Payroll and benefits include items such as:
salaries
wages

overtime pay

payroll taxes and costs (income tax, social

security contribution, trade unions and etc)

employer paid benefits (retirement plans,

insurance, vacations and etc)

Other deductions according to employees

directions (Loan deductions)

Salaries
 Salaries are usually associated with "white-collar"
workers such as office employees, managers,
professionals, and executives.

 Salaried employees are often paid semi-monthly

(e.g., on the 15th and last day of the month) or bi-
weekly and their salaries are often stated as a gross
annual amount, such as "Tshs.48, 000,000 per year."
Wages
 Wages are often associated with production
employees (sometimes referred to as "blue-collar"
workers), non-managers, and other employees
whose pay is dependent on hours worked.

 The pay for these employees is generally stated as a

gross, hourly rate, such as "Tshs. 13.52 per hour.
 Employees receiving wages are often paid weekly or
biweekly.
Overtime Pay
 Overtime refers to time worked in
excess of 40 hours per week (for the
case of Tanzania government
employees).
Payroll Withholdings
 This section of payroll accounting focuses
on the amounts withheld from employees'
gross pay
 Payroll withholdings include:
Employee portion of Social Security
contribution
Employee portion of Health Insurance

Income tax

Court-ordered withholdings

Other withholdings
Employee portion of social
security contribution
 Social Security Contribution is withheld
from an employee's salary or wages
and is matched by a contribution from
the employer
 The employer is responsible for
remitting the funds
 Income tax
 Another part of payroll accounting involves
the employees' income tax known as Pay as
You Earn (PAYE) and is made progressively
 Amounts withheld from employees for
income taxes are reported on the employer's
balance sheet as a current liability. When the
employer remits the amounts to the
government, the current liability is reduced.
Net pay
 Net pay is the amount that remains
after withholdings are deducted from an
employee's gross pay.

 it is the amount of cash the company

will pay directly to the employees.
Journal entries
 The following are common journal
entries in payroll:
 If the payments are not yet cleared the
entries are:
Dr. Wages control account
Cr. Tax payable account
Cr. National Insurance contributions account
Cr. Wages accrued account
Journal entries
 If the payments are cleared by cash the
entries are:
Dr. Tax payable account
Dr. National Insurance contributions account
Dr. Wages accrued account
Cr. Cash account
Journal entries
 The wages control account, however, represents the
gross wages for the period, and it is the amount in
this account that must be allocated to the job,
overhead and capital accounts.
 The accounting entries are:
Dr Work in progress
Dr Factory overhead control account
Cr Wages control account
Tanzania’s applicable PAYE for
the year 2019/2020
 PAYROLL CALCULATION FOR THE MONTH OF………………

EARNINGS DEDUCTIONS

Social Total
EMPLOYEE'S BASIC ALLOWAN OVERTI GROSS Income Security Trade Union Health Deducti NET
S/N NAME SALARY CES ME PAY Tax Fund Contribution Insurance ons PAY
 Example
 Journalize the following payroll cost for the month of April:
Factory payroll Tshs
Direct 180,000
Indirect 144,000
Other payroll

Salesmen’s salaries 145,800

Administrative Salaries 70,200
Gross payroll 540,000
Social security contribution (employees contribution) 37,800

Social security contribution (employers contribution) 37,800

Income tax deducted 135,000
Employees pension fund (paid by employer) 39,960
 Example
 From the given information Prepare a payroll for MMM ltd
 MMM ltd is small firm employing four individuals Mwenge, Ujamaa,
Mwongozo and Mapinduzi.
 The following records were made in relation to the attendant of work.
Worker
 Total labour hours
Mwenge 232
Ujamaa 232
Mwongozo 224
Mapinduzi 216
 Example
 These records are in relation to a work four weeks
[month] in which a worker is supposed to work for
6 days a week and 8 hours a day.
 Each worker is paid at a rate as follows;
Mwenge 3,000 Per Hour
Ujamaa 2,400 Per Hour
Mwongozo 2,500 Per Hour
Mapinduzi 2,600 Per Hour
 Example
Allworkers are given house allowance which is 20% of the basic wages
and transport equal to 200,000 per month.
The law requires that each employee should contribute towards pension

an amount equal to 5% of the basic wage to which an employer has to

add 15% making a contribution to pension of every employee to be equal
to 20% of the basic wage.
 For simplicity let us assume that every worker is liable to pay income

tax equal to 20% of total earnings.

The employer is required to pay 5% payroll levy based on the total

earnings paid to the workers. Mwongozo has taken an advance payment

of 200,000.
The hours worked beyond the regular hours in the month are regarded

as overtime and overtime is paid at a rate plus overtime premium of 20%

of the basic rate.
Solution