Piecework Wage System - Labour Cost, Cost Accounting Video Lecture | Cost Accounting - B Com

okay now moving on to the the
remuneration system that is based on the
work of the employee rather than time
then what we do is we take number of
units produced as the basis to calculate
the compensation that we'll be paying to
an employee now when we talk about
calculating the compensation on output
basis we have three different methods
number one a straight piece work method
okay then we have guaranteed
these work method and lastly we have
differential
piecework method in a straight piece
work method whatever number of units
produced will be multiplied with the
particular rate for example an
employee's paid for two dollars every
unit then suppose he has produced
hundred units many who paid two hundred
dollars directly any fee has not
produced anything at all he won't be
getting anything
okay so simply more units produced more
will be the compensation
our in a guaranteed peace work system or
peace work method what we do is there
will be a portion of the wage that will
be paid for sure that will be fixed okay
and if he has not worked enough that he
will still be getting that particular
amount of wage but if he works more and
proportionately he has on more than that
specific amount then he will be getting
is extra share as well could be
understanding that in a minute with an
example however in case of differential
piece work method we'll be having a set
rate of pay for a particular range of
output for example for first experience
we have one dollar for next 50 units we
have two dollars for another 50 units we
have three dollars
then another 50 units we have $5 so this
way we have differential piecework our
compensation rates for an employee let's
have a look at an example and we
understand that in with that
all right here is the question and
according to this an employee works
under a guaranteed weight system where
the policies that he would be getting at
least hundred dollars a day normally
he's paid at two dollars per unit that
he produces in a month his performance
for each week is as follows week 180
units 230 350 units and in week four do
60 units and we have to decide and how
much compensation will be paying to this
individual okay so for week one and the
normal basis he produces the units and
each unit is paid at two dollars so he
will be paid at one sixty dollars okay
in week two however he produced thirty
units and if we multiply it with two it
gets to sixty dollars but he we paid one
hundred for this one okay because he is
current it to pay a hundred dollars and
a week it should be week
for week three he has produced 50 units
multiplied by two it comes up 100 so it
doesn't make any difference Eve if he's
getting a little milking his produce or
guarantee this one the same thing or
week four he has produced 60 units and
comes up 120 dollars so it will be paid
hundred and twenty dollars so in a month
the total wage would be the sum of the
wage he has received or ease his a he
has the right to receive in heat week so
this is how under a guaranteed wage
scheme will be receiving the wage okay
however in case of differential
piecework method what we have is would
be having the different rates for
different range of output so let's have
a look at one of the question and then
we'll be able to understand it
completely okay we have a question and
in this we have two employees as an
honest on that are working in a
differential piece or method now the
calculation or the basis of calculation
of wage for both of them are is a bit
different essentially it is calculated
as one dollar per unit of production
remains below hundred units level but if
he produces between 100 and 200 marks
then he will be calculated they would be
compensated at the rate of two dollars
per unit produced and if his output is
between 200 and 300 units level then he
will be compensated at three dollars per
unit whereas Hassan's wage is a
calculated $1 for production of 200
units and then for anything or any unit
produced after
100 unit up to next 100 like that is for
additional 100 he would be paid $2 ok
there are always it different from the
way we are calculating a sons wage is
that in this case we'll be looking at
the range in which the output is falling
and then we'll be applying a singular
rate whereas in here we'll be
calculating the compensation for first
hundred units separately and next 100
units on two dollars per unit and then
next one and the units at three dollars
per unit now the requirement is
calculate the wage of ascend and son if
their output is 250 and 280 respectively
okay so let's see how we're going to do
that in case of hustle
he is produced 115 years now this is
following in the third category so we'll
simply be multiplying 250 with 3 okay
and this will give us the way you should
put a wage of sin $50 whereas in case of
a son first
we'll be calculated on $1 basis it gives
us $100 next 100 that is from 101 to 200
will be calculated $2 per unit this
gives us 200 and the rest of 80 that
means the rest 80 are calculated at $3
per unit which gives us to 40 units so
in total we have to 4200 for 44 40 plus
100 gives us 540
okay so this is the example of
differential piecework method and you
know both of these methods can be
examined by the examiner we have other
methods as well and the difference would
be soaked method but this is so far what
we have for the syllabus all right
so that concludes our discussion on the
incentive schemes related to labor the
other small topic that is left now is
labor turnover which I will be
discussing in our next class