shwet jain 05417001709 cost accounting

7/30/2019 Shwet Jain 05417001709 Cost Accounting

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Tecnia Institute of

Advanced Studies

Cost Accounting

Project File

Various Methods OfWage Payment &

Incentive Schemes

Submitted by: Submitted to:

Shwet jain Prof. Asim Sahore


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BBA (M) 2nd semester

Enrollment no-05417001709

Methods of remuneration:There are two basic method of labour remunertation

1)Time rate system2)Piece rate system

Time rate system

Workers are paid accordingly to the time for whichthey work. Payment may be on hourly basis,dailybasis or monthly basis. In this system noconsideration is given to the quantity and quality ofwork done.

Wages = no. of hours worked * rate per hour

Piece rate systemWages under this system are paid according to thequantity of work done. A rate is fixed per unit of theproduction and wages are calculated by the followingformula

Wages = rate per unit * no. of units produced

Incentive PlansVarious incentive plans are as follows:

1) Halsey Premium Plan:Under this method standard time is fixed for the

job and worker is given wages for the actual timetaken to complete the job at the agreed rate per


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hour plus a bonus to one half on the wages of thetime saved.

Total wages = Time rate x time taken +

bonus

Where bonus = 50 % (time saved

*time rate)

2)Halsey Weir Plan:

This method is precisely the same as halsey plan

except that in halsey weir plan the bonus is

30% of the time saved.

Total earnings = Time rate x time taken

+ bonus

Where bonus = 30 % (time

saved *time rate)

3)Rowan plan : Under this method, hours is a fixed

percentages of wages of time saved and worker is

given a guaranteed wage rate for the time taken to

finish the job.


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Bonus = time saved * time taken * time

rate

Time allowed

Total earnings = time rate * time taken +

bonus

4)Taylor's differential piece rate system:Thissystem was introduced by F W Taylor, the father of

scientific management. In this system two piece rate

system 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 complete 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. Usually these rates are 83 % of the piece

work rate for inefficient workers and 175 % of the piece

work rate for the efficient workers.


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5)Merrick differential piece rate system :This

is the modification ofthe Taylors plan while taylor

prescribe two rates, merricks plan lays down three

rates. The lowest rate is for the beginners and the

middle rate is for the developing workers and the

highest rate is for highly efficient workers. Efficiency is

determined in terms of percentage

Efficiency in % = actual output * 100

Standard output

The rates of remuneration are

Level of efficiency Piece rate

I. Upto 83% ordinary

piece rate

II. 83 % - 100 % 110% of

ordinary piece rate

III. Above 100% 120% of

ordinary piece rate


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II. 66.66% -- 100% Bonus increases in

steps & rises to 20%

III. Over 100% 20% bonus+1% bonus

for each increase of 1% in efficiency

8)Bedaux Plan : In this plan standard time of each job

is determined in minutes knowm as bedaux points or

Bs. one B point represent amount of work which an

average worker can do under ordinary condition in one

minute. This standard time is determined by work study

and each job is assigned a no of Bs.

Bonus = no.of bs saved *hourly rate * 75

60

100

Earnings = (hours worked * hourly rate) + bonus


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shwet jain 05417001709 cost accounting

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