Methods of Wage Fixation - 2
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The document summarizes three different incentive pay systems: 1) The Bedaux system calculates earnings based on the number of "B's" a worker achieves compared to the standard time allowed. A worker's earnings include their hourly rate plus a bonus for B's saved. 2) Taylor's differential piece rate system pays workers above standard at 120% of the piece rate and below standard at 80% of the piece rate. 3) Merrick's multiple piece rate system provides different bonus incentives based on production levels compared to the standard: less than 83% gets the normal rate, 83-100% gets a 10% bonus, and above 100% gets a 20% bonus. Worker earnings are calculated as
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Methods of Wage Fixation - 2
- 1. BEDAUX SYSTEM TAYLORS DIFFERENTIAL PIECE RATE SYSTEM MERRICKS MULTIPLE PIECE RATE PLAN By A. Raja
- 2. BEDAUX SYSTEM From the following data calculate the earnings under Bedaux System Qn) B’s get by the workman is 90. Hourly rate is Rs. 2.40/- and time allowed in minutes is 60.Calculate Earnings? Sol: From the given data B’s got by the workman = 90 Hourly Rate = Rs. 2.40/- Time allowed in minutes = 60 B’s Saved = 90- 60 = 30 Earnings = 1 x 2.40 + (75/100) x(2.40 / 60) x 30 = 2.40 + 0.90 = Rs. 3.30/- Note: Here Time Allowed is 60 minutes i.e. 1 hour (so in earnings calculation Time taken as 1). Formula: Earnings = Time taken x Time rate + (75/100) x (Hourly rate /60) x B’s saved
- 3. TAYLOR’S DIFFERENTIAL PIECE RATE SYSTEM: To illustrate the Taylors piece rate system, we take the following: Standard output =100 units Rate per unit = 10 paise Case (i): Performance is Above the Standard Output = 120 units Earnings = 120 x (120/100) x 0.10 = Rs. 14.40/- Case (ii): Performance is Below the Standard Output = 90 units Earnings = 90 x (80/100) x 0.10 = Rs. 7.20/- Differentials to be applied: i) 120% of piece rate at or above the standard. ii) 80% of piece rate when below the standard.
- 4. MERRICK’S MULTIPLE PIECE RATE SYSTEM: Example: Given the following data. Calculate wages payable under Merrick’s Differential Piece Rate System. Standard Production 120 Units Actual Production of Worker A 90 Units Actual Production of Worker B 100 Units Actual Production of Worker C 130 Units Rate per piece 0.10 per unit. RATES BONUS INCENTIVES 1) UP TO 83% NORMAL RATE 2) ABOVE 83% TO 100% 110% OF NORMAL RATE 3) ABOVE 100% 120% OFNORMAL RATE
- 5. MERRICK’S MULTIPLE PIECE RATE SYSTEM cont… Solution: Calculation of efficiency of each worker: For Worker A = (90/120) x 100 = 75% For Worker B = (100/120) x 100= 83.33% For Worker C = (130/120) x 100 = 108.33% Earnings = No. of Pieces x Rate per piece A = 90 x 0.10 = Rs. 9/- B = 100 x 0.11 = Rs. 11/- C= 130 x 0.12 = Rs. 15.60/-
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