Calculation of Earnings under Taylor's Differential Piece Rate Plan

Standard output and wages for a month of 25 days is 1,000 units and Rs. 12,500. The actual units produced by worker A during 25 days are 1,100. We need to calculate the earnings of worker A under Taylor's differential piece rate plan.

Step 1: Calculate the piece rate for the worker A
Piece rate for worker A = (Total wages - Guaranteed wages) / Total standard output
Guaranteed wages = Standard wages / Number of days in a month x Number of days worked by the worker A
Guaranteed wages = Rs. 12,500 / 25 x 25 = Rs. 12,500
Total wages = Guaranteed wages + (Actual units produced - Total standard output) x Piece rate per unit
Piece rate per unit for worker A = (150% of single piece rate) = 1.5 x (Guaranteed wages / Total standard output)
Single piece rate = Guaranteed wages / Total standard output
Single piece rate = Rs. 12,500 / 1,000 = Rs. 12.50
Piece rate per unit for worker A = 1.5 x (Rs. 12.50) = Rs. 18.75
Total wages = Rs. 12,500 + (1,100 - 1,000) x Rs. 18.75 = Rs. 14,375

Step 2: Calculate the earnings of worker A
Earnings of worker A = Guaranteed wages + (Actual units produced x Piece rate per unit)
Earnings of worker A = Rs. 12,500 + (1,100 x Rs. 18.75) = Rs. 35,625

Explanation

Taylor's differential piece rate plan is a wage incentive plan that differentiates between efficient and inefficient workers. The plan provides a guaranteed wage to all workers who meet the standard output. Workers who exceed the standard output are paid a higher piece rate per unit. The plan aims to motivate workers to increase their productivity and earn higher wages.

In this case, the standard output for a month of 25 days is 1,000 units, and the standard wages are Rs. 12,500. Worker A produced 1,100 units during 25 days, which is above the standard output. Therefore, worker A is eligible for a higher piece rate per unit.

To calculate the piece rate per unit for worker A, we first calculate the single piece rate, which is the guaranteed wages divided by the total standard output. The single piece rate is Rs. 12.50. The piece rate per unit for worker A is 150% of the single piece rate, which is Rs. 18.75.

The total wages for worker A are the sum of guaranteed wages and the additional wages earned for producing more units than the standard output. The total wages for worker A are Rs. 14,375.

The earnings of worker A are the sum of guaranteed wages and the wages earned for producing the actual units. The earnings of worker A are Rs. 35,625.

Conclusion

Under Taylor's differential piece rate plan, worker A earned Rs. 35,625 for producing 1,100 units during 25 days. The plan provides an incentive for workers to increase their productivity and earn higher wages.