This plan has been introduced by F.H. Halsey in 1891.
He was an American engineer.
This scheme provides workers hourly wage for time taken to do a work plus 50% (0.5 or ½) bonus time saved at hourly rate.
Standard time is pre fixed for every job or work.
Remaining 50% of bonus is left for other workers.
Generally, the bonus percentage varies from 30% to 70%.
If bonus is 30%, remaining 70% distribute to other workers.
If bonus is 40%, remaining 60% distribute to other workers.
Lack of information, bonus is 50%
If there is no saving in the standard time allowance, the worker is paid only his day rate.
Formulas under Halsey premium plan
Total wage or earning |
= Basic wages + Bonus |
Basic wages |
= Time taken x Wage rate |
Bonus |
= 50% (Standard time – Time taken) x Wage rate |
Or |
= ½ (Time saved) x Wage rate |
|
|
Premium plan |
= Time taken x Wage rate + 50 % (Standard time – Time taken) x Wage rate |
Or |
= (TT x WR) + 0.5 (ST – TT) x WR |
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This plan is introduced by David Rowan in 1901.
Under this system, basic wage is guaranteed for the actual time attended by the workers.
Standard time is preset for the task or work.
Bonus is allowed to the worker if he/she completes work before standard time.
Formula of Rowan Plan or System
Total wage or earning |
= Basic wages + Bonus |
Basic wages |
= Time taken x Wage rate |
Bonus |
= [(Standard time – Time taken) ÷ Standard time] × Time taken x Wage rate |
Total wage under premium plan
= Time taken × Wage rate + [(Standard time – Time taken) ÷ Standard time] × Time taken × Wage rate
= Time taken × Wage rate + (Time saved ÷ Standard time) × Time taken × Wage rate
Keep in Mind (KIM)
Actual remuneration = Basic wage = Time taken x Wage rate per hour |
Bases |
Halsey Plan |
Rowan Plan |
Bonus |
Under Halsey plan, the bonus increases steadily with increases in efficiency. |
Under Rowan plan, the bonus increases upto certain level then starts to decrease. |
Efficiency |
Under Haley plan, less efficient worker does not get bonus. |
Under Rowan plan, less efficient worker may get same bonus as a more efficient worker gets bonus. |
Earnings per hour |
Under Haley plan, when time saved is more than 50% of standard time, earnings per hour is higher. |
Under Rowan plan, when time saved is less than 50% of standard time, earnings per hour is higher. |
Quality of output |
Under Haley plan, the quality of output decreases. |
Under Rowan plan, the quality of output does not much effect. |
Using |
Halsey plan is easy to understand and easy to calculate the wages. |
Rowan plan is difficult to understand. |
Motivational |
Halsey plan motivates the employees. |
Rowan plan discourages the employees. |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 5A
During first week of January, a worker manufactured 600 articles. He receives wage for a guaranteed 48 hours week at the rate of $50 per hour. The estimated time to produce one article is 5 minutes and under incentive scheme, the time allowed is increased by 20%.
Required: Total earnings according to:
(a) Piecework with guaranteed weekly wages; (b) Halsey plan; (c) Rowan plan
[Answer: (a) $3,000; (b) $2,700; (c) $2,880;
* Under incentive scheme = 5@120% = 6 minutes]
SOLUTION
Given and working note:
Units produced by workers = 600 units
Guaranteed work per week = 48 hours
Wage rate per hour = $50
Time require for 1 unit = 5 minutes
Under incentive scheme = 5@120% = 6 minutes
Piece work with guaranteed weekly wages
1 unit needs = 6 minutes
Units produced in 1 hour (60m) = 60m ÷ 6m = 10 units
Time/wage rate per unit = $50 ÷ 10 units = $5
Now,
Total wages
= Units produced x Time rate per unit
= 600 units x $5
= $3,000
Total wages under Halsey
Given and working note:
Time needs for 1 unit = 6 minutes
Time needs for 600 units = 600 units x 6m = 3600m or 60 hours
Total earning under Halsey
= TT x WR + 50% (ST – TT) x WR
= 48 x $50 + 0.5 (60 – 48) x $50
= $2,400 + $300
= $2,700
Total wages under Rowan
= TT x WR + [(ST – TT) ÷ ST] x TT x WR
= 48 x $50 + [(60 – 48) ÷ 60] x 48 x $50
= $2,400 + $480
= $2,880
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Ledger |
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PROBLEM: 5B
A machining operator receives an ordinary daily wage $320 per day of 8 hours. The standard output for machining has been fixed at 80 pieces per hour (time as fixed for premium bonus). On a certain day, the output of the operator on this machine is 800 pieces.
Required: Total wages if: (a) Daily basis ($1 per unit is paid for extra output.)
(b) Straight piecework basis at the standard rate; (c) Rowan plan is adopted; (d) Halsey plan is adopted
[Answer: (a) $480; (b) $400; (c) $384; (d) $360;
* WRPH = $320 ÷ 8 hours = $40;
ST = 800 units ÷ 80 units = 10 hours]
SOLUTION
Given and working note:
Wage for 8 hours |
= $320 |
|
Wage rate per hour |
= $320 ÷ 8 hours |
= $40 |
Standard output per hour |
= 80 pieces |
|
Standard output for 8 hours |
= 80 x 8 |
= 640 units |
Units produced by worker |
= 800 units |
|
Extra output (for Bonus) |
= 800 – 640 |
= 160 units |
Standard time for 800 units, |
= 800 ÷ 80 units per hour |
= 10 hours |
Time saved by worker |
= 10 – 8 |
= 2 hours |
If a bonus of $1 is paid for each extra output
Total wages = Ordinary wages + bonus
= $320 + (160 units x $1)
= $320 + $160
= $480
If paid for on straight piece work basis at the standard rate
Wage rate per unit = $320 ÷ 640 units = $0.50
Total wages = Output x Wage rate per unit
= 800 units x $0.50
= $400
Total wages under Rowan plan
= T T x WR + [Time Saved ÷ ST] x TT x WR
= 8 x $40 + [2 ÷ 10] x 8 x $40
= $320 + $64
= $384
Total wages under Halsey plan
= T T x WR + 50% (Time Saved) x WR
= 8 x $40 + 0.5 (2) x $40
= $320 + $40
= $360
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 5C
Following extracted information are supplied to you:
Standard time allowed for the job 10 hours
Guaranteed wage per hour under Halsey $20
Wage rate per unit under Rowan plan $24
Required: (1) Actual time taken; (2) Actual remuneration
[Answer: (1) 8 hours; (2) $192]
SOLUTION:
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PROBLEMS AND ANSWERS OF HALSEY AND ROWAN PLAN |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 5A
ABC Manufacturing Company has following extracted data:
0.25 labour hour is needed to produce 8 units
Wages rate per hour is $54
1,600 units were produced in 40 hours of work
Required: (1) Wages payable under (a) Standard time; (b) Total wage under Halsey premium plan
(c) Total wage under Rowan premium plan
[Answer: (a) ST = 50 hours; (b) $2,430; (c) $2,592]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 5B
Following information are supplied to you
Standard time allowed for the job 20 hours
Guaranteed wage per hour under Halsey $40
Wage rate per unit under Rowan plan $48
Required: (if basic wages of Halsey is equal to total wages of Rowan)
(i) Actual time taken by the worker; (ii) Remuneration earned by the worker under Halsey; (iii) Bonus under Rowan plan
[Answer: (i) 16 hours; (ii) $768; (iii) $128]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 5C
A worker under Halsey premium plan earned a bonus of $200. He took the total of 35 hours to complete his task. The wage rate per hour is $40
Required: (i) Time saved by the worker; (ii) Total wage earned under Rowan premium plan
[Answer: (i) 10 hours; (2) $1,711]
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