Halsey Premium Plan | Accounting for Labour | Wages for Premium Plan
Arjun EP
Accounting for Premium Plan | What is the Premium Plan in Accounting for Labour
Premium plan is also called incentive wage system and bonus plan system.
Time and piece wages system have their own advantage and disadvantage.
By the disadvantage of them, this incentive wage system has been developed.
It is developed to provide financial benefits to skilled workers and workers are separated as skilled and unskilled.
Some common features of this system are:
· Time wages are guaranteed
· As production increase, labour remuneration also increases; but not in proportion of output.
· As efficiency increase, wage cost per unit reduces.
Under this plan, various plans have been developed.
Among them, the popular plans or systems are as follow:
Halsey Premium Plan
Rowan Plan
Taylor Plan
Gantt Task Plan
Scanlon’s Plan
Halsey Premium Plan | Halsey Premium Plan in Accounting for Labour
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.
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/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 |
Keep in Mind (KIM)
|
Bonus calculation limit is 30% to 70%. |
|
In other words, 40% or 60% is also possible if given in the question. |
|
Lack of information, bonus is 50% |
Advantages of Halsey plan
The main advantages of Halsey premium plan are:
It is easy to operate and simple to use.
It guarantees time wage to workers.
It makes different between skilled and unskilled workers by wages.
The wages of saved time is shared between workers and employees.
Fixed cost per unit is reduced by large production.
Disadvantage Halsey plan
The main disadvantages of Halsey premium plan are:
It is difficult to preset standard time for production.
Quality work may not be possible because workers want to save time; saved time increases their incentives.
Workers may oppose this method because their wages on saved time is shared with other employees.
Click on the photo for FREE eBooks
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 3A
The extracted data are given related to labour:
Standard time fixed for production 50 hours
Time spend by worker 40 hours
Wage rate per hour $40
Required: (1) Bonus under Halsey plan; (2) Total wages under Halsey plan; (3) Effective rate per hour
[Answer: Bonus = $200; Total wage = $1,800; ERPH = $45]
SOLUTION:
Bonus under Halsey plan
= 50% (Standard time – Time taken) x Wage rate
= 0.5 (50 – 40) 40
= 0.5 x 10 x 40
= $200
Total wages under Halsey plan
= Basic wages + Bonus
= (Time taken x Wage rate) + Bonus
= (40 hours x $40) + $200
= 1,600 + 200
= $1,800
Effective rate per hour
= Total wages ÷ Actual time taken
= $1,800 ÷ 40 hours
= $45
Alternative,
Total wages under Halsey plan
= Time taken x Wage rate + 50 % (Standard time – Time taken) x Wage rate
= (TT x WR) + 0.5 (ST – TT) x WR
= (40 hours x $40) + 0.5 (50 – 40 hours) $40
= 1,600 + 0.5 x 10 x 40
= 1,600 + 200
= $1,800
###########
|
Click on the link for YouTube videos |
|
|
Accounting Equation |
|
|
Journal Entries in Nepali |
|
|
Journal Entries |
|
|
Journal Entry and Ledger |
|
|
Ledger |
|
|
Subsidiary Book |
|
|
Cashbook |
|
|
Trial Balance and Adjusted Trial Balance |
|
|
Bank Reconciliation Statement (BRS) |
|
|
Depreciation |
|
|
|
|
|
Click on the link for YouTube videos chapter wise |
|
|
Financial Accounting and Analysis (All videos) |
|
|
Accounting Process |
|
|
Accounting for Long Lived Assets |
|
|
Analysis of Financial Statement |
|
###########
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 3B
The extracted data are given related to labour:
Total wages earned by worker for certain period under Halsey plan was $2,040
Time spend by worker to complete his work 64 hours
Wage rate per hour $30
Required: (A) Standard time allowed to worker; (B) Time saved by worker (in hours); (C) Bonus earned
[Answer: (a) 72 hours; (b) 8 hours; (c) $120]
SOLUTION:
Standard time allowed to worker
|
Total wages |
= |
Time taken (TT) x Wage rate |
+ |
50 % (Standard time – TT) x Wage rate |
|
$2,040 |
= |
(64 hours x $30) |
+ |
0.5 (ST – 64 hours) x $30 |
|
2,040 |
= |
1,920 |
+ |
15 ST – 960 |
|
2,040 – 1920 + 960 |
= |
15 ST |
|
|
|
ST |
= |
1,080 ÷ 15 |
|
|
|
|
= |
72 hours |
|
|
Time saved by worker
= Standard time – Time taken
= 72 – 64
= 8 hours
Bonus earned
= 50% (Standard time – Time taken) x Wage rate
= 0.5 (Time saved) x WR
= 0.5 x 8 x 30
= 0.5 x 10 x 40
= $120
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 3C
The extracted data are available as under:
Standard time is pre fixed 10 hours
Guaranteed time rate (wage rate) $32 per hour
Total earning under Halsey $288
Required: (1) Time taken by worker; (2) Time saved by worker; (3) Bonus of worker
[Answer: (1) 8 hours; (2) 2 hours; (3) $32]
SOLUTION:
Time taken by worker
|
Premium plan |
= |
Time taken × Wage rate |
+ |
50 % (ST – Time taken) x Wage rate |
|
288 |
= |
TT x $32 |
+ |
0.5 (10 – TT) × $32 |
|
288 |
= |
32 TT |
+ |
160 – 16 TT |
|
288 – 160 |
= |
32 TT – 16 TT |
|
|
|
128 |
= |
16 TT |
|
|
|
128 ÷16 |
= |
TT |
|
|
|
TT |
= |
8 hours |
|
|
Therefore, time taken (TT) = 8 hours
Time saved
= Standard time – Time taken
= 10 – 8
= 2 hours
Bonus under Halsey
= 50% x Time saved x Wage rate
= 0.5 x 2 hours x $32
= $32
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 3D
The extracted data are given below:
Standard time pre fixed for job 40 hours
Time rate per hour $24
Actual time taken by workers:
Ramesh 24 hours
Rajesh 32 hours
Rajendra 36 hours
Required: Total wage earned by each worker under Halsey premium plan
[Answer: Ramesh = $768; Rajesh = $864 and Rajendra = $912]
SOLUTION:
Total wages under Halsey Premium plan
= Time taken x Wage rate + 50 % (Standard time – Time taken) x Wage rate
= (TT x WR) + 0.5 (ST – TT) x WR
Ramesh
= (24 hours x $24) + 0.5 (40 hours – 24 hours) x $24
= $567 + 0.5 x 16 x $24
= $576 + $192
= $768
Rajesh
= (32 hours x $24) + 0.5 (40 hours – 32 hours) x $24
= $768 + $96
= $864
Rajendra
= (36 hours x $24) + 0.5 (40 hours – 36 hours) x $24
= $864 + $48
= $912
Keep in Mind (KIM)
|
Halsey-Weir Plan: |
|
|
This system is also known Weir Premium Scheme. |
|
|
This plan proposes bonus in the ratio of 33 : 66. |
|
|
This sharing is made between workers and employer on the time saved. |
|
|
Total earning |
= Basic wages + Bonus |
|
Basic wages |
= Time taken x Wage rate |
|
Bonus |
= 33% (Standard time – Time taken) x Wage rate |
|
Premium plan |
= Time taken x Wage rate + = 33% (Standard time – Time taken) x Wage rate |
#####
PROBLEMS AND ANSWERS OF HALSEY PREMIUM PLAN |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 3A
The data related to labour are given below under Halsey plan:
Standard time pre fixed by company 16 hours
Actual time taken to complete work by worker 12 hours
Wage rate per hour $50
Required: (a) Basic wages; (b) Bonus; (c) Total wages
[Answer: (a) $600; (b) $100; (c) $700]
PROBLEM: 3B
Following data is given below related to one working day:
Standard time for production 10 hours
Guaranteed time rate (wage rate) $34 per hour
Total earning under Halsey plan $323
Required: (under Halsey plan) (1) Time taken; (2) Time saved; (3) Bonus
[Answer: Time taken = 9 hours; Time saved = 1 hour; Bonus = $17]
***** EP Online Study *****
Thank you for investing your time.
Please comment on the article.
You can help us by sharing this post on your social media platform.
Jay Google, Jay YouTube, Jay Social Media
जय गूगल. जय युट्युब, जय सोशल मीडिया
You might also like
Income Statement under NFRS | Balance Sheet under NFRS | P&S 1
Balance Sheet under NFRS | Statement of Financial Position under NFRS | Solution
Income Statement under NFRS | Profit or Loss Statement under NFRS | SOLUTION
Income Statement under NFRS | Balance Sheet under NFRS | EXPLANATION
Financial Statement under NFRS| Classification of Accounting Standards
Swar | Vyanjak | A Aa I Ee | Ka Kha Ga Gha | Ka Kaa Ki Kee | Barahkhadi | Kra Khra Gra
ABCD | British Phonetic ABCD | American Phonetic ABCD | ABCD in Devanagari
The Half-closed Eyes of the Buddha and the Slowly Sinking Sun | All Solution | NEB English Class 12 | Short Story Q&A
Comment box closed