Premium Bonus Methods :
Calculate std time for a job.Calculate std time for a job.
If task is completed in std time or above std. time then Guaranteed wages paid.If task is completed in std time or above std. time then Guaranteed wages paid.
If task is completed in less than std time then benefit of time saved is shared between ER &If task is completed in less than std time then benefit of time saved is shared between ER & EE in pre-defined ratio (Constant sharing Plan /
EE in pre-defined ratio (Constant sharing Plan / Variable sharing Plan)Variable sharing Plan)
Question 24 Explain Halsey and Halsey weir systems. Also describe its advantages and disadvantages? Question 24 Explain Halsey and Halsey weir systems. Also describe its advantages and disadvantages? Answer:-
Answer:- Under Halsey systemUnder Halsey system :- Std. time is fixed. If work completed in less than std. time, bonus paid (50% :- Std. time is fixed. If work completed in less than std. time, bonus paid (50% of wages for time saved). Also
of wages for time saved). Also Called Halsey fifty percent plan.Called Halsey fifty percent plan. Wages
Wages = Time taken X Time rate += Time taken X Time rate + 50%50% of time saved X Time Rate of time saved X Time Rate Halsey Weir System
Halsey Weir System is same as Halsey System except that bonus paid to workers is 30% of the time saved i.e. is same as Halsey System except that bonus paid to workers is 30% of the time saved i.e. Wages
Wages = Time taken X Time = Time taken X Time rate +rate + 30%30% of time saved X Time Rate of time saved X Time Rate
Advantages
Advantages:-:-
Simple to understand & easy to calculate.Simple to understand & easy to calculate.
Guaranteed wages given.Guaranteed wages given.
Incentive to efficient worker to complete task in less than standard time.Incentive to efficient worker to complete task in less than standard time.
Incentive to employer for better production facilities since employer receive 50% share in savings.Incentive to employer for better production facilities since employer receive 50% share in savings.
Disadvantages
Disadvantages:-:-
Difficult to fix std. time so precisely.Difficult to fix std. time so precisely.
Sharing principle may not be liked by EE.Sharing principle may not be liked by EE.
Question 25 Explain Rowan System along with its advantages and disadvantages? Question 25 Explain Rowan System along with its advantages and disadvantages?
Answer:-
Answer:- A std time is fixed for a job & bonus is paid if time is saved. A std time is fixed for a job & bonus is paid if time is saved. Wages
Wages = Time taken X Rate per h = Time taken X Rate per hour +our +
X Time Taken X Rate per hour X Time Taken X Rate per hourAdvantages
Advantages:-:-
Simple to understand & easy to calculate.Simple to understand & easy to calculate.
Guaranteed wages given.Guaranteed wages given.
Incentive to efficient worker to complete task in less than standard time.Incentive to efficient worker to complete task in less than standard time.
Incentive to employer for better production facilities since employer receive 50% share in savings.Incentive to employer for better production facilities since employer receive 50% share in savings.
Disadvantages
Disadvantages:-:-
Difficult to fix std. time so precisely.Difficult to fix std. time so precisely.
Sharing principle may not be liked by EE.Sharing principle may not be liked by EE.
Question 26
Question 26
Explain group system of wage Explain group system of wage payment? Discuss methods used for distributing wages topayment? Discuss methods used for distributing wages to each worker?each worker? Answer:-
Answer:- when jobs are to bewhen jobs are to be performed collectively by a number of workers. Eperformed collectively by a number of workers. Each man’s work dependsach man’s work depends otherother man’s
man’s work performed. Hence Not possible to measure separately the output of each worker. work performed. Hence Not possible to measure separately the output of each worker. Here workersHere workers constituting a group are treated as a unit & combined output of such unit is considered for wage calculation. constituting a group are treated as a unit & combined output of such unit is considered for wage calculation. The methods usually used to distribute wages to each worker as below:
The methods usually used to distribute wages to each worker as below: 1.
1. EqualEqual, if all workers are of , if all workers are of same grade, same skill, ssame grade, same skill, same wage rate & worked for same duration.ame wage rate & worked for same duration. 2.
2. Pro-rata to time-ratePro-rata to time-rate when the time spent by the individual worker is the same but wage rate is different when the time spent by the individual worker is the same but wage rate is different 3.
3. On the basis of theOn the basis of the time rates and attendancetime rates and attendance of each worker. of each worker. 4.
4. On the basis ofOn the basis of pre-determined percentagepre-determined percentage; if % pre-determined on the basis of skill, wage rate etc; if % pre-determined on the basis of skill, wage rate etc
5.
5.
Pay wage rate time based to unskilled workers & distribute balance amount to skilled by any of abovePay wage rate time based to unskilled workers & distribute balance amount to skilled by any of above method. Applicable when group consists of unskilled & skilled workers.method. Applicable when group consists of unskilled & skilled workers. Question 27
Question 27Explain group bonus & grExplain group bonus & group bonus scheme. oup bonus scheme. Also describe objectives & advantages of group Also describe objectives & advantages of group bonusbonus scheme?
scheme?
Answer:-
Answer:- Group Bonus = bonus paid for collective efforts of groupGroup Bonus = bonus paid for collective efforts of groupof workers (Distributed among workers onof workers (Distributed among workers on some agreed basis
some agreed basis – – normally in proportion of wages on time basis) normally in proportion of wages on time basis) Group bonus scheme = Bonus paid to group of
Group bonus scheme = Bonus paid to group of employees working together (Suitable when individual effortsemployees working together (Suitable when individual efforts cannot be decided for payment of bonus). Ex. Construction work, team work of masons and labourers which cannot be decided for payment of bonus). Ex. Construction work, team work of masons and labourers which produces results.
produces results. Objectives of GBS: Objectives of GBS:
To createTo create team spiritteam spirit among workers. among workers.
To createTo create interestinterest among workers to improve performance. among workers to improve performance.
To reduceTo reduce wastage in materialswastage in materials & & idle timeidle time..
To produceTo produce optimum outputoptimum output at minimum cost. at minimum cost. Advantages of GBS:
Advantages of GBS:
It creates a sense of team spirit (personal benefits depends upon group efforts)It creates a sense of team spirit (personal benefits depends upon group efforts)
It creates healthy competition among workers (Eliminate excess waste of material)It creates healthy competition among workers (Eliminate excess waste of material)
It creates easy understanding of target output.It creates easy understanding of target output. Question 28 Explain incentive schemes for indirect workers? Question 28 Explain incentive schemes for indirect workers? Answer:-
Answer:- Indirect workers not involved directly in production (Packing & cleaning staff, Inspection staff) soIndirect workers not involved directly in production (Packing & cleaning staff, Inspection staff) so difficult to set standard output & time.
difficult to set standard output & time.
But necessary to provide incentives to indirect workers also due to following reasons: But necessary to provide incentives to indirect workers also due to following reasons: 1.
1. DissatisfactionDissatisfaction:: No incentive will lead to dissatisfaction among indirect workers.No incentive will lead to dissatisfaction among indirect workers. 2.
2. EntitlementEntitlement:: Bonus is also an entitlement (Right) for Indirect workers since indirect contribute.Bonus is also an entitlement (Right) for Indirect workers since indirect contribute. 3.
3. Team SpiritTeam Spirit:: Bonus payment to indirect workers creates team spirit.Bonus payment to indirect workers creates team spirit. 4.
4. Increase in efficiency:Increase in efficiency: increasedincreased efficiency of services as plant repairs & material handlingefficiency of services as plant repairs & material handling 5.
5. Dependence on indirect labour Dependence on indirect labour :: efficiency of direct workers reduced when work depends upon serviceefficiency of direct workers reduced when work depends upon service rendered by indirect workers.
rendered by indirect workers.
Question 29 Explain profit-sharing and Co-partnership schemes.
Question 29 Explain profit-sharing and Co-partnership schemes. Also describe advantages &Also describe advantages & disadvantages?
disadvantages? Answer:-
Answer:- Profit sharing schemes = Workers paid Profit sharing schemes = Workers paid share in profit of org. at share in profit of org. at pre-determined ratio along with wages.pre-determined ratio along with wages. (Recognise efforts of workers towards profit making
(Recognise efforts of workers towards profit making)) Co-partnership scheme
Co-partnership scheme = = workers share profit of org. in workers share profit of org. in the form of shares (Recognise efforts the form of shares (Recognise efforts of workers towardsof workers towards profit making)
profit making)
Advantages Disadvantages
Advantages Disadvantages
EE feel their importance in earning
EE feel their importance in earning profit by org soprofit by org so improve production, efficiency.
improve production, efficiency.
Worker get demotivated if profit reduces Worker get demotivated if profit reduces Reduction in
Reduction in Labour turnover Labour turnover rate if rate if minimum minimum period period ofof service is put as condition for participating in such service is put as condition for participating in such schemes.
schemes.
Profit depends on good work of workers
Profit depends on good work of workers & other factors& other factors also. Profit may be less if other factors work negatively also. Profit may be less if other factors work negatively thereby dissatisfaction among workers in spite of good thereby dissatisfaction among workers in spite of good work
work Better
Better team team work work & & better better co-operation co-operation Less Less share share in in profit profit my my hamper hamper zeal zeal to to workwork EE may doubt the profit declared
EE may doubt the profit declared No individual recognition of EE No individual recognition of EE Question 30 What are the ways to calculate workers share in net profits of a
Question 30 What are the ways to calculate workers share in net profits of a firm. Explain treatment offirm. Explain treatment of bonus in costing?
bonus in costing?
Answer:- Ways to calculate: Answer:- Ways to calculate: 1.
1. A fixed % may be allowed to workers as bonus at the end of the financial year. A fixed % may be allowed to workers as bonus at the end of the financial year. 2.
2. A fixed % A fixed % of the department’s profit caof the department’s profit can be allowed as profit sharing if profit earned is department wisen be allowed as profit sharing if profit earned is department wise 3.
3. Profits may be computed per unit of output & a part of profit may be allowed to workers as bonus.Profits may be computed per unit of output & a part of profit may be allowed to workers as bonus. Treatment in Costing
Minimum bonus as per Act = (8.33% of wages earned or
Minimum bonus as per Act = (8.33% of wages earned or ₹₹ 100) whichever is higher 100) whichever is higher Maximum bonus as per Act = 20%.
Maximum bonus as per Act = 20%.
There can be two methods of dealing with bonus: There can be two methods of dealing with bonus: 1.
1. Treat asTreat as overheadsoverheads if if bonus paid to indirect workers.bonus paid to indirect workers. 2.
2. Inflate wage rate by including bonus if bonus paid to direct workers.Inflate wage rate by including bonus if bonus paid to direct workers.
Question 31 Describe the principles to be considered in deciding method of fixation of remuneration Question 31 Describe the principles to be considered in deciding method of fixation of remuneration payable?
payable? Answer:-
Answer:- Principles arePrinciples are 1.
1. Geographical Area Based:Geographical Area Based: Wage-rates in an industry should be fixed in conformity withWage-rates in an industry should be fixed in conformity with the generalthe general wage-levels in geographical area.
wage-levels in geographical area. 2.
2. Performance \ Job Based:Performance \ Job Based: Wage-rates should be fixed considering degree of skill, effort required for aWage-rates should be fixed considering degree of skill, effort required for a job.. Higher wages should be fixed for high skill requiring job.
job.. Higher wages should be fixed for high skill requiring job. 3.
3. Minimum Wages:Minimum Wages: Wage-rates should guarantee a minimum wage (Otherwise insecurity/ High LWage-rates should guarantee a minimum wage (Otherwise insecurity/ High L abourabour Turnover Rate)
Turnover Rate) 4.
4. Maintain Standard of living:Maintain Standard of living: Wage-rates should be fixed ensuring reasonable standard of living.Wage-rates should be fixed ensuring reasonable standard of living. 5.
5. Incentive as per output:Incentive as per output: wage rate should ensure possibility of earning extra amt by extra efforts.wage rate should ensure possibility of earning extra amt by extra efforts. Question 32 Write short notes
Question 32 Write short notes on efficiency rating procedures?on efficiency rating procedures? Answer:-
Answer:- Efficiency is usually related with performance.Efficiency is usually related with performance.Level Level of efficiency of efficiency (LOE) (LOE) ==
If the time taken equals or less than standard time, he is rated as efficient.If the time taken equals or less than standard time, he is rated as efficient.
If the time taken more than standard time he is rated as inefficient.If the time taken more than standard time he is rated as inefficient. For efficiency rating of employees the following procedures may be followed: For efficiency rating of employees the following procedures may be followed: 1.
1. Determining std time:Determining std time: Determine std time required by worker for a Determine std time required by worker for a job (using time & motion sjob (using time & motion study)tudy) 2.
2. Measuring Actual Performance of workers:Measuring Actual Performance of workers: Record actual O/P with actual time.Record actual O/P with actual time. 3.
3. Computation of efficiency rating:Computation of efficiency rating: compute LOE using above formula.compute LOE using above formula. Question 33 What is
Question 33 What is labour productivity. Explain factors for increasing labour productivity?labour productivity. Explain factors for increasing labour productivity? Answer:- Labour productivity :
Answer:- Labour productivity :
LP is used to measure efficiency of workers (Check effectiveness in utilisation of men, money & material). LP is used to measure efficiency of workers (Check effectiveness in utilisation of men, money & material). Factors for increasing LP
Factors for increasing LP:: 1.
1. Employ right person with right skill.Employ right person with right skill. 2.
2. Place right man on right job.Place right man on right job. 3.
3. Provide right training to young & old workers.Provide right training to young & old workers. 4.
4. Always avoid excess or shortage of labour in factory. Always avoid excess or shortage of labour in factory. 5.
5. Study job for simplification and standardisation.Study job for simplification and standardisation.
Question 34 Discuss briefly, how you will deal with casual workers and workers employed on outdoor Question 34 Discuss briefly, how you will deal with casual workers and workers employed on outdoor work in Cost Accounts? OR Write short
work in Cost Accounts? OR Write short note on casual workers and note on casual workers and outdoor workers?outdoor workers? Answer:-
Answer:- Casual workers: workers employed temporarity for short duration if permanent labour force is notCasual workers: workers employed temporarity for short duration if permanent labour force is not sufficient to produce required units of output OR regular workers are on leave due to their illness or any other sufficient to produce required units of output OR regular workers are on leave due to their illness or any other reason.
Treatment in cost accounts:-
Treatment in cost accounts:- Wages paid to casual workers in the nature of direct labour treated as direct Wages paid to casual workers in the nature of direct labour treated as direct labour cost forms part of prime cost. Wages paid to casual workers in the nature of indirect labour are treated as labour cost forms part of prime cost. Wages paid to casual workers in the nature of indirect labour are treated as production overheads.
production overheads. Outdoor workers:
Outdoor workers: Workers not perform work in factory (either perform work in their homes or at customer site). Workers not perform work in factory (either perform work in their homes or at customer site). 2 categories
2 categories
1.
1.
Those who are on the list of regular workers. They are provided raw material to perform task atThose who are on the list of regular workers. They are provided raw material to perform task at customer’scustomer’s site as per instructions of management of the organisation.site as per instructions of management of the organisation.
2.
2.
Those who are not on the list of regular workers. They are provided raw material to perform task at theirThose who are not on the list of regular workers. They are provided raw material to perform task at their home.home.
Rigid control over out-workers as follows: Rigid control over out-workers as follows:
1.
1. Reconcile materials issued with the output.Reconcile materials issued with the output. 2.
2. Check Completion of task in given time.Check Completion of task in given time. 3.
3. Surprise checks to ensure physical presence of workersSurprise checks to ensure physical presence of workersat home/customer’s site.at home/customer’s site. Question 35 Distinguish between Job
Question 35 Distinguish between Job Evaluation and Merit Rating?Evaluation and Merit Rating?