Incentive Schemes III - Labour Cost, Cost Accounting Video Lecture | Cost Accounting - B Com

that's not the only incentive scheme or
incentive system that we have we have
other just like we understood before
that we can have the incentive schemes
on the result basis and also on the work
done basis and also we have the
classification for individual and group
bonus system or group incentive scheme
so I will be going through one by one
that what are the different schemes that
we have and I will be going
completing the result based incentive
schemes first okay and in that I'll be
talking about the individual schemes
first of all that's the major area of
the labor costing in terms of incentive
schemes that will be calculating
individual incentives and the result
basis and also the group incentives and
the result basis and then afterwards at
the end we'll be talking about how to
calculate incentives or what kind of
incentives employees will be having if
their weight is calculated on the basis
of work done okay but if we talk about
the individual incentive schemes we have
three of the renowned systems which is
Hall say system was the weird system and
then the Roman system Roman system gives
us two derivations there are two
techniques Robin has identified and
we'll be looking at these four
methodologies in total to calculate the
bonus or the incentive in addition to
the basic pay or the overtime pay the
employee is going to receive as part of
his salary or wages but remember one
thing
that all these three methodologies are
for methodologies in total are based on
the concept of time saved that is the
result they are all result based
what we'll be doing is we'll be
calculating time saved by comparing the
time taken and time allowed and how do
you calculate time taken and time
allowed most of the time in the question
you will be given straight forward how
much time has been taken or you can
calculate by on the basis of the number
of years that you have produced okay
whereas in case of time allowed but you
will have to do is you will have to look
at the actual output and you will have
to consider at how much time the actual
output should have taken on the basis of
standard so that means every question if
it is based on the result basis they
will be giving you information regarding
the set time period to do a certain
amount of job okay that means every
question will be clearly telling you
that for a certain set of work how much
time was allowed to the number of
employees or an employee and then you
will be given an information and how
much work he has done or how much time
he has taken actually to do a certain
amount of work now in all of these
situation or all these methods if the
time taken okay is more
I'm allowed it should be time allowed -
time taken just a fraction if a time
taken is more than the time allowed then
there will be no bonus and he will be
paying straight wage there will be no
incentive at all however if the time
allowed comes more than the time taken
then it means that he has saved time he
has done more work in lesser amount of
time and for that we'll be calculating
the bonus for him that would be paid in
addition to basic pay and overtime
premium or overtime pay in other words
and we have four different bases to
calculate the bonus as we have seen as
we can see here now let's do one
question together and we'll understand
how are we going to calculate the
policies using these three methods or
four methods in total all right here we
have one question let me read it first
and then I will be coming to the
discussion and how are we going to
approach and solve this question sweet
master and swift master are known for
their efficiency among other employees
this period they were allowed total of
40 hours each that means both of them
were given 40 are separately to complete
a job of producing 200 units of vanilla
chocolate mix speed master was asked to
completely cover 48 hour 40 hours even
if he produces 200 units before time and
thus it was able to produce to 60 units
in 40 hours time Swift master on the
other hand had to attend wedding and
requested supervisor that he will only
be tending production flow until
producing 20 minutes which he was able
to produce in 32 hours only nor were
time was worked during the period
employees are paid six dollars per hour
calculate the gross pay of employees and
the following methods okay
in this question we have two employees
and and the way they are working and the
output is a bit different from each
other speed master work for total 40
hours and he was able to produce more
than required number of units that is
260 units whereas Swift master only
reduced the required number of units and
he was able to finish the work in less a
time that is much lesser but by eight
hours and he was able to finish things
now before for the hours work complete
now the question in the exam can come a
in both of these fashions either you are
giving more number of units for standard
work of time or you are given a standard
number of units for given number of
hours okay and how are we go is supposed
to calculate the time save in this
situation this is what we need to learn
because if we can calculate time seed
only then we'll be able to apply with
three different schemes we have and only
then will have the value for bonus and
which will helping us in calculating
cross pay because and again if we are
unable to calculate time say we won't be
able to calculate anything further so
let's see in case of speed master time
saved is calculated again as time taken
- sorry time allowed - time taken okay
now in order to calculate the time
allowed for 240 60
units because that is what an actual
output was why he took woman how much
how much time was actually allowed on
the basis of standard standard time was
to produce 200 units it was 40 hours
okay so we need a standard rate of
tongue or standard time now in order to
calculate the standard time we'll be
multiplying so i dividing 200 units over
40 hours and comes up that every hour we
are producing 5 units per hour okay
right so if we are producing five
minutes each hour then how many hours to
60 number of units I'm going to take it
could be 52 hours now if it is a bit
confusing for you and how I made a
calculation then you can calculate the
standard time like this as well 40 hours
okay and in this will produce we were
supposed to produce millions of each
unit supposed to take point to coerce
okay now in order to produce to 60 units
you need 52 hours but how much how many
how many hours has actually been taken
by that person well he does that work in
only 40 hours okay he was allowed on the
basis of the actual output he was
supposed to complete it in 52 hours but
he took the time taken by him was 40
hours so now we can calculate the time
saved which is 52 minus 40 equals tell
hours
he has saved 12 hours worth of work by
increasing in efficiency increasing his
efficiency over time okay
looking on to the Swift master however
it's fairly really simple okay that is
that he produced 200 units and he took
32 hours okay so in that case the time
she will be time allowed to produce 200
units and the time taken by him to
produce the same limburgish he was
allowed 200 sorry 40 hours but he took
only
- right so he saved eight hours okay now
we can calculate the weight is first of
all calculating the gospel of
Speedmaster and for that the basic pay
first of all will be number of hours you
work which is 40 hours and he was paid
at six dollars per hour so he was
getting $240 as the basic pay whereas in
addition to bonus well if his bonus is
calculated in a holse scheme okay then
he is allowed at 50% rate by 50% of time
saved so let's see how we're going to
calculate this he saved 12 hours so 50%
of this multiplied by the time wages
that is the six dollars he'll be paid
forces at the same rate it is $6 basic
Philippi okay and for this he'd get $36
okay and this way he will be paid for at
276 dollar will be his cross pay all
right
however the fish
relation is based on also via which is
33 1 over 3 percent of the time saved
then in that case it basic pay is going
to be the same this is not going to be
any different which for the motive level
6 gives us 240 okay and bonus will be
according to Han say we're system scale
equation is going to be number of our
sale which is 12
okay multiplied by 30 3 1 by 3 percent
okay
then multiplied by 6 this makes a room
now 1 over 3 is actually going to be
written like this 12 multiplied by 30
3.3333 recurring so you are going to put
in the calculator as many through these
as you can and then multiply it with 6
and if you do it so I'm going to get 2
and yes
but that is one actually it should be
like this okay
33 one over three percent right so don't
do that mistake so 12 multiplied by 0.33
and did nine by six you get 24 okay and
in this case the gospel will be 264
right however if we continue our
calculation and calculate and the Rowan
scheme basically again will stay the
same be no difference in it okay will be
240 first power
is your own scheme which is based on but
with method one now again we know that
under global scheme even we have two
methods so blind the first one which
basically say that you would be applying
this formula time taken multiplied by
time saved and you can divide it over
time and down okay then multi
is with your Harley wage rate so this is
the formula for calculating the bonus
under Rome's method 1 which is just
putting the values will be getting time
taken
40 hours time saved 12 hours and time
allowed 152 hours okay and you're
basically wage rate is six so if you
calculate this then the amount you get a
55 okay and in this case your gross pay
would be sum up to 40 and 55 which comes
up to 95 okay now this is the first
method what about the second method in
the second method however it is
percentage of time saved now it's left
on the entity it's up to the management
to decide at what percentage they want
to offer to an employee as an incentive
okay for example in all say it was 50%
of the time sale it can be it can be
different can be 20% can be 60 70 80 or
anything okay so whatever percentage
supervisor or the management is going to
decide that they will be offering as an
incentive to an employee the same will
be used to calculate the bonus suppose
here
they said that 80% of the times here
will be paid as bonus in this case their
bonus they will still be the same this
240 is not going to be in difference
okay and this is Row 1 method 2 and as I
said 80% of the time said will be given
as incentive so 12 is the time series
went 8 is the percentage and 6 is a rate
okay so if we just calculate this could
get 57.6 so me now it comes up 58 right
and in this case your gross pay or the
gross pay off Speedmaster would be 298
all now on the same basis you can
calculate the cross pay off Swift master
I'm giving you 10 minutes to calculate
this and after that I will be doing the
question right on the white board
okay I hope you people can get the
calculations regarding Swift master it's
really easy that you already have the
number of hours that has been saved just
have to put in the values and you will
get the answer for the gross pay okay
but one thing that we really need to
understand that in case of Swift master
would be concluding basic pay only on 32
are spaces because he worked only for 32
hours and he left the job okay you went
to wedding so he won't be paid at 40
hours it would be paid only for 32 hours
the rest of the calculation is almost
going to be the same you just have to
change the values here it would be 8
here also it's going to be 8 here also
should be 8 and here could be 40 okay
and here also you're putting the value
of it and then just put in the values
and calculate and you will get the cross
pay we're on again remember one thing
that he would be paid basic pay on 32
hours basis