Page 12 - Cost Accounting - Ready Reckoner

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CHAPTER – 2

Labour

Labour:

 The wages paid to labourers is called Labour Cost or Employee Cost.

 The wages paid to labourers can be piece rate basis or time basis.

 There are many scientific methods of computing wages paid to labourers. The
scheme of payment under various plans are:

PIECE RATE SYSTEM:

1. Straight Piece Rate = Number of pieces x Rate/ piece.
2. Differential Piece Rate:

a) Taylor’s Differential Piece Rate Plan:

Efficiency of Workers Wage rate
Less than 100% efficiency 80% piece rate
At or above 100% efficiency 120 % piece rate

Efficiency of a worker is measured as = x 100

b) Merrick’s Differential Piece Rate Plan:

Efficiency of Workers Wage rate
Less than 83% of efficiency 100% piece rate
Between 83% to 100% efficiency 110 % piece rate
Above 100% efficiency 120 % piece rate