LABOUR
Method of Remuneration:
1) Time Rate system
a) Flat time Rate
b) High wage system
c) Graduated time rate
2) Payment by Results
a) Piece rate system
i) Straight piece rate
ii) Differential piece rate
• Taylor system
• Merrick system
b) Group Bonus System
i) Budgeted Expenses
ii) Towne gain sharing scheme
iii) Cost efficiency bonus
iv) Priest man system
c) Combination of Time and Piece rate
i) Gantt task and Bonus scheme
ii) Emerson Efficiency system
iii) Point scheme
• Bedaux system
• Haynes manit system
d) Premium bonus plans
i) Halsey premium plan
ii) Halsey weir premium plan
iii) Rowan scheme
iv) Barth scheme
v) Accelerating premium bonus scheme
e) Other incentive schemes
i) Indirect monetary incentive
• Profit sharing
• Co-partnership
ii) Non-Monetary Incentive
1) Time rate system = Hours worked * Rate per hour (Basic wages)
2) Piece rate system:
i) Straight piece rate earnings = Number of units produced * Rate per unit
ii) Differential Piece rate
a) F.W.Taylor’s differential rate system
» 83% of piece rate when below standard
» 125% of piece rate when above or at standard
b) Merrick differential or multiple piece rate system
Efficiency level Piece rate
» up to 83% »Normal piece rate
» 83% to 100% » 110% of Normal rate
» Above 100% » 120% of Normal rate
iii) Gantt Task and Bonus system
Output Payment
» Below standard » Time rate (guaranteed)
» At standard » 20% Bonus of Time rate
» Above standard » 120% of ordinary piece rate
iv) Emerson’s Efficiency system
Efficiency Payment
» Below 66.7% » Hourly Rate
» from 66.7% » Hourly rate (+) increasing bonus according to degree
to 100% of efficiency on the basis of step bonus rates
» Above 100% » Hourly rate (+) 20% Bonus (+) additional bonus of 1%
of hourly rate for every 1% increase in efficiency
v) Halsey Premium Plan = Basic wages + 50% of time saved * Hourly Rate
vi) Halsey Weir Premium Plan = Basic wages + 30% of time saved * Hourly rate
vii) Rowan Plan = Basic wages + Time saved * Basic Wages Time allowed
viii) Bedaus Point system = Basic wages + 75% * Bedaus point/60 * Rate/hr
ix) Barth’s System = Hourly rate * √Std time *Time taken
Labour Turnover:-
1) Separation rate method = Separation during the period
Average No. of worker’s during the period
2) Net labour T.O rate (or) Replacement method
= Number of replacements
Average No. of worker’s during the period
3) Labour flux rate = No. of separation + No. of replacement
Average No. of worker’s during the period
Accounting Treatment
1) Normal Idle time = Charged to factory overheads
2) Normal but un-controllable = It should be charged to job by inflating wage rate.
3) Abnormal = It should be charged to costing P & L a/c
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