1. Lecture-13 Main Ahmad Farhan (ACA)
Labor Costing
Lecture-13
Main Ahmad Farhan (ACA)

2. Time Base Bonus Plans
Halsey Premium Plan.
Halsey wire Premium Plan.
Rowans Premium Plan.

3. Halsey Premium Plan
Bonus pay = 50% of time saved x normal wage rate
Halsey Wire Premium Plan.
Bonus pay = 30% of time saved x normal wage rate

4. Time saved = Standard time –Actual time taken
Rowans Premium Plan
Time saved = Standard time –Actual time taken
Premium Rate =
Time saved
Standard time
* 100
Bonus Pay = Premium rate * Normal wages

5. Example Standard hours 40 hours Completion time 30 hours
Time saved hours
Hourly rate Rs. 10 per hour
i. Halsey Plan
ii. Halsey wire plan
iii. Rowan plan

6. Solution
Halsey Premium Plan 50%
Normal wages = Actual time taken * wage rate
= * = Rs. 300
Bonus = 50% of time saved x normal wage rate
(50% * 10 hours ) 5 x 10 = 50
Gross wages =
= 350

7. Bonus Pay Effective Wage Rate Actual time given 350 = 11.667 per hours30

8. Halsey Wire Premium Plan
Normal wages = Actual time taken * wage rate
= * = Rs. 300
30% of time saved x Normal wage Rate
(30% * 10 hours) 3 x 10 = 30
= 330
Effective Wage Rate
330 = 11 p/hr 30

9. Rowans Premium Plan
Basic wages = Actual time x normal wage rate
30 x = 300
Time Saved = Standard hours-Actual hours taken
= 10
Time saved/standard time x 100
10 / 40 x 100 = 25%
300+(300 * 25%) = 375

10. Effective Wage Rate
Gross pay
Actual hours
= Rs p/hr 30

11. Piece Rate Base Premium Plans
Straight Piece Rate plan
Unit produced * Standard rate (p.u)

12. Example
Hourly wage rate = Rs. 50
One units produced = 30 minutes
Normal production in 1 hour = 2 units
50 = 25 P.U 2
Per Piece wages x units manufactured
25 X = 375
Per Piece wages =

13. Piece Rate With Minimum Guarantee Time Base Wages
A protections is given to the worker against low productivity and low wages caused by factors beyond their control.

14. Example
Normal wage Rate Rs. 50 Per hours.
Unit Rate Rs. 10 Per unit
Scenario
1- Actual product (8hours) 20 units
2- Actual product (8hours) 50 units

15. Solution Scenario-1 Time base wage guaranteed 8x50 = 400
Piece rate base wages x10 = 300
Guaranteed wages given = 400
Scenario-2
Time base wage guarantee 8x50 = 400
Piece Rate base wage x10 = 500
Wages = 500

16. Differential Piece Rate Plans
Tailors differential piece rate / Two piece rate plan
Marix differential piece rate.

17. Tailors Piece Rate Plan
Standard or at par
Below Standard (Quantity wise)
At standard
50 x 12 p.u = 600
Below standard
40 x 10 p.u = 400

18. Marix Piece Rate
At below (Rs % standard rate)
At Par (Rs 15 80%-100%)
At above (Rs 12 at above 100%)

19. Example
Three workers A, B & C
Standard out put 40 units
Piece Rate p.u
A produced units
B produced units
C produced units
Calculate the wage rate by Tailor or Marix methods.

20. Solution Standard out put 40 units A&B are below standard
C is above standard units
Tailors Method.
A x 10 = 250
B x 10 = 250
C x 12 = 540
By Matrix
A x10 = 250
B 35 x = 420
C 45 x = 765
Below 80%
80%-100%
Above 100%

21. Contribution By employer
The employer can be provide some benefits to employee.
Provident Fund.
Group Insurance.
E.O.B.I benefits.

22. Employee benefit To Social Security To Provident Fund To E.O.B.I Fund
Entries
Employee benefit
To Social Security
To Provident Fund
To E.O.B.I Fund

23. Entries
Employee benefit 10,000
To Social Security ,000
To Provident Fund 5,000
To E.O.B.I Fund ,000
Distribution employer benefit
Administration (25%) 2,500
F.O.H Cost (60%) 6,000
Selling Exp (15%) 1,500
To employees benefit 10,000