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
Priestman’s Plan
Scanlon’s Plan
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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 percentage of the question or 80% to 125% 
The main advantages of Taylor system are:
This system provides much more incentive to cross standard output.
Skilled workers are paid more wages.
It is scientific method for both company and workers.
The main disadvantages of Taylor system are:
It is not suitable to unskilled workers because they will receive fewer wages.
Minimum wage is not guaranteed under this method.
There is very different in low cost and high cost.
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 6A
Extracted data are taken given below:
Standard time 4 units per hour
Standard rate $32 per hour
Working hours during a day 8 hours
Units produced by worker during 7 days are:
Ms. Rajani 220 units
Ms. Beenu 235 units
Required: (a) Wage payable to workers under Taylor’s differential piece rate; (b) Effective hourly wage rate
[Answer: Rajani = $1,460.80; $26.09; Beenu = $2,350; $41.96]
SOLUTION:
Given and working note:
Wage rate per unit 
= $32 ÷4 units 
= $8 
Standard output in 7 days 
= 8 hours x 4 units x 7 days 
= 224 units 
Working hours in 7 days 
= 7 days x 8 hours 
= 56 hours 
Ms. Rajani = 220 units
It is less than standard output; she will receive 83% of piece rate.
Wage payable 
= Output x Wage rate per unit @ 83% 

= 220 units x $8@83% 

= 220 units x $6.64 

= $1,460.80 
Effective hourly wage rate
= $1,460.80 ÷ 56 hour
= $26.09
Ms. Beenu = 235 units
It is more than standard output; she will receive 125% of piece rate.
Wage payable 
= Output x Wage rate per unit @ 125% 

= 235 units x $8@125% 

= 235 units x $10 

= $2,350 
Effective hourly wage rate
= $2,350 ÷ 56 hours
= $41.96
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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 



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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: 6B
Extracted data are taken given below related to Taylor’s differential plan:
Normal time allowed for one unit 3 minutes
Benefit to worker per hour $30
Working hours per day 8 hours
Working days during a month 25 days
Units produced by workers during a month are:
Mr. X 3,900 units
Mr. Y 4,000 units
Mr. Z 4,200 units
Required: Wage payable to workers under Taylor’s differential piece rate
[Answer: X = $4,855.50; Y = $7,500; Z = $7,875]
SOLUTION:
Given and working note:
Units produced in 1 hour 
= 60 minutes in one hour ÷ 3 units 
= 20 units per hour 
Wage rate per unit 
= $30 ÷ 20 units 
= $1.5 
Standard output in 25 days 
= 8 hours x 20 units x 25 days 
= 4,000 units 
Mr. X = 3,900 units
It is less than standard output; he will receive 83% of piece rate.
= Output x Wage rate per unit @ 83%
= 3,900 units x $1.5@83%
= 3,900 units x $1.245
= $4,855.50
Mr. Y = 4,000 units
It is equal to standard output; he will receive 125% of piece rate.
= Output x Wage rate per unit @ 125%
= 4,000 units x $1.5@125%
= 4,000 units x $1.875
= $7,500
Mr. Z = 4,200 units
It is more than standard output; he will receive 125% of piece rate.
= Output x Wage rate per unit @ 125%
= 4,200 units x $1.5@125%
= 4,200 units x $1.875
= $7,875
Keep in Mind (KIM)
Merrick system 

It is the modified rule of F. W. Taylor. Merrick has categorized workers into three grades. 

The main aim of this rule is to motivate average workers 

Efficiency upto 83% 
Normal rate 
Efficiency upto 100% 
110% above normal rate 
Efficiency above 100% 
120% of standard rate 
#####
Problems and Answers of Taylor’s Differential Plan 
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 6A
The extracted data related to Taylor’s differential plan are given below:
Standard production per hour 10 units
Normal time rate per hour $40
Below standard 83% of piece rate
Above standard 125% of piece rate
In 8 hours working day units produced by:
Worker A 70 units
Worker B 85 units
Required: (1) Piece rate; (2) Total earning of each worker under Taylor’s differential plan
[Answer: (1) $4; (2) $232.40 and $425; * Piece rate = $40 ÷ 10 units = $4]
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = Birr = Currency of your country
PROBLEM: 6B
Following data are available from ABC Manufacturing Company:
Standard production 8 units per hour
Normal time rate $40 per hour
Differentials are to be applied:
Below standard 80% piece rate
Above standard 120% of piece rate
In a ninehour day, Sanjay produces 54 units and Manoj produces 75 units.
Required: (a) Wages under straight piece rate system; (b) Taylor’s differential piece rate system
[Answer: (a) Straight: $270 and $375; (b) Tailor: $216 and $450]
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