Every manufacturing company and business organization needs human being resources.
These humans being may be resource of administrators and labour.
Without labour, a manufacturing company cannot complete its production.
It is saying that talents, calibers and skilled manpower are other assets of the business organization.
Labour cost is the important part in manufacturing and Construction Company.
After materials, labour cost is the largest part in production.
Every labour has his merits and demerits.
To control labour cost, organization should understand to workers.
To take more work from workers, the organization should satisfy them.
When workers do best work, cost per unit will be decreased.
There are three types of labour.
They are unskilled labour, semi-skilled labour and skilled labour.
Unskilled labour gets fewer wages but skilled labour gets highest wages.
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Fredrick W. Taylor is known as the father of scientific management.
He recommended wages for lower rate 80% and higher rate 125% for standard time.
This system was designed to differentiate between skilled and unskilled workers.
Skilled worker receives higher rate.
Unskilled receives lower rate.
Efficiency below standard 100% |
80% or 83% % of standard piece rate |
Efficiency equal standard 100% |
125% of standard piece rate |
Efficiency above standard 100% |
125% of standard piece rate |
Keep in Mind (KIM)
Lower rate is 80% to 85% of piece rate below standard production; higher rate is 120% to 125% Tribhuvan University has also given 80% and 83% in the question. You are required to take given % of the question or 80% to 125% |
This is the combination of Halsey and Rowan premium system.
Under this system, minimum wages is guaranteed.
It protects average workers by providing time rate wages.
Efficient worker gets 20% bonus for standard work.
This system is also known progressive rate system.
There are three alternatives:
Output below standard |
Standard production × Piece rate |
Output equal standard |
Production units × Time rate @ 120% |
Output above standard |
Production units × Piece rate@120% [or given in the question] |
Keep in Mind (KIM)
If any worker produces less than standard output, he/she will receive minimum guarantee wages |
Total wage = Standard production × Piece rate |
(A) Brief Answer Questions
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Accounting Equation |
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Journal Entries in Nepali |
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Journal Entries |
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Journal Entry and Ledger |
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Ledger |
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Subsidiary Book |
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Cashbook |
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Trial Balance and Adjusted Trial Balance |
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Bank Reconciliation Statement (BRS) |
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Depreciation |
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Financial Accounting and Analysis (All videos) |
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Accounting Process |
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Accounting for Long Lived Assets |
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Analysis of Financial Statement |
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(B) Short Answer Questions
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2061/ii, Q: 6
A worker employed for 150 hours at a wage of Rs 20 per hour has produced 1,440 units. The standard output per hour is 9 units
Required: (1) (a) Wage rate per piece
(b) Total wages under Taylor’s differential piece rate system ranging 83% and 125%
(c) Total wages under Gant’s task bonus system
[Answer: WRPU = Rs 2.22; Total wage = Rs 4,000; Total wage = Rs 3,840]
SOLUTION
Given and working note:
Produced by worker |
= 1,440 units |
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Total working hours |
= 150 hours |
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Wage rate per hour (WRPH) |
= Rs 20 |
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Standard output per hour |
= 9 units |
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Standard production |
= 150 units × 9 units per hour = 1,350 units |
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Wage rate per unit or piece |
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= Rs 20 ÷ 9 units |
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= Rs 2.22 |
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Taylor’s different Piece rate system |
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Worker has produced = 1,440 units |
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It is more than standard output. So he will receive 25% bonus |
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Total wage |
= Outputs × Piece rate @125% |
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= 1,440 units × Rs 20/9 @125% |
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= 1,440 × Rs 2.778 |
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= Rs 4,000 |
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Gantt task bonus system |
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Worker has produced = 1,440 units |
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It is more than standard output. So he will receive 20% bonus |
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Total wages |
= Output × Piece rate@120% |
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= 1,440 × Rs 20/9 @120% |
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= 1,440 × Rs 2.67 |
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= Rs 3,840 |
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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2063, Q: 6
The different piece rate applied by A Company is as under:
For below standard = 80% of piece rate
For above standard = 120% of piece rate
The working hour per day is 8 hour and normal rate of wages per hour is Rs 40. The standard time per unit is 30 minutes. The work completed by a worker is 20 units for one day.
Required: (a) Total wage under straight piece rate; (b) Total wage Taylor’s differential piece rate
[Answer: Total wage = Rs 400 and Rs 480]
SOLUTION
Given and working note:
Below standard |
= 80% of Piece rate |
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Above standard |
= 120% of Piece rate |
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Working hours per day |
= 8 hours |
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Wage rate (WR) per hour |
= Rs 40 |
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Standard time (ST) per unit |
= 30 minutes or 1 hour |
= 2 units |
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Piece rate per unit |
= Rs 40 ÷ 2 |
= Rs 20 |
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Standard output per day |
= 8 hours × 2 units |
= 16 units |
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Units produced by worker |
= 20 units per day |
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Earning under straight piece rate |
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Earning |
= Units produced × Piece rate per unit |
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= 20 units × Rs 20 |
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= Rs 400 |
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Taylor’s differential piece rate |
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Worker has produced 20 units. These units are more than standard output. So, he will receive 20% bonus |
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Total wage |
= Outputs × Piece rate@120% |
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= 20 units × Rs 20@120% |
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= 20 × Rs 24 |
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= Rs 480 |
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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
2064, Q: 6
The standard production pre fixed by ABC Manufacturing Company per day per worker is 16 units and working hour per day is 8 hours. The guaranteed piece work rate is Rs 5 per unit. The piece rate above the standard has been fixed at Rs 6.50. The standard job cards of the three workers for a day reported the following details:
Mr. A 12 units
Mr. B 16 units
Mr. C 20 units
Required: Wages of each worker under the Gantt task and bonus plan
[Answer: Total wage: A= Rs 80; B = Rs 96; C = Rs 130]
SOLUTION
Given and working note:
Standard per unit per day = 16 units
Working hours per day = 8 hours
Guaranteed piece work rate = Rs 5 per unit
Above standard output rate = Rs 6.50
Worker Mr. A has produced 12 units. These are below standard. So, he will get guaranteed wage only
Wages to Mr. A
= Standard output × Piece rate
= 16 units × Rs 5
= Rs 80
Worker Mr. B has produces 16 units. These are equal to standard. So he will get 20% bonus of time rate
Wages to Mr. B
= Standard output × Time rate@120%
= 16 units × Rs 5@120%
= 16 units × Rs 6
= Rs 96
Worker Mr. C has produces 20 units. These are above to standard. So he will get Rs 6.5 per unit given in the question
Wages to Mr. C
= Standard output × Piece rate
= 20 units × Rs 6.50
= Rs 130
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