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Labour Costing: Calculation of Wages & Bonuses

The document discusses different methods for calculating wages and bonuses, including hourly/time rate systems where wages are paid based on hours worked at an agreed hourly rate, and piece rate systems where wages are paid according to units or pieces produced. It also covers calculating overtime wages at premium rates, and various bonus schemes such as Halsey, Halsey Weir, and Rowan plans that provide bonuses based on time or productivity targets being exceeded. Sample calculations are provided for wages, overtime, and bonuses under different systems.

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Salar Cheema
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209 views13 pages

Labour Costing: Calculation of Wages & Bonuses

The document discusses different methods for calculating wages and bonuses, including hourly/time rate systems where wages are paid based on hours worked at an agreed hourly rate, and piece rate systems where wages are paid according to units or pieces produced. It also covers calculating overtime wages at premium rates, and various bonus schemes such as Halsey, Halsey Weir, and Rowan plans that provide bonuses based on time or productivity targets being exceeded. Sample calculations are provided for wages, overtime, and bonuses under different systems.

Uploaded by

Salar Cheema
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Labour Costing

Calculation of Wages & bonuses


ALEVEL

ACCOUNTING
BY
SAJID MUNIR
0300-9466136

Calculation
Hourly/Time rate system:

wages are paid on the basis of hours worked using an agreed hourly rate.

No. of hours * Hourly rate

Normal working hours per day , if not specified in question


ALEVEL

8 hours per day ACCOUNTING


BY
SAJID MUNIR
0300-9466136
Normal days per week ??

5 days

Overtime: hours in excess of 8 hours per day or 40 hours per week

Overtime is paid at a premium rate i.e. time and a half , time and a quarter ,double time
etc.

Time and a half means if someone works 2 hours overtime he/ she would be paid for 3
hours.

Calculation
Piece rate system:

wages are paid according to units/pieces produced

No overtime is paid in this system

Wages = no of units/pieces * rate per piece / unit

ALEVEL

ACCOUNTING
BY
SAJID MUNIR
0300-9466136

Bonus schemes:

Bonus is an incentive for efficient workers

Efficiency can be saving in time allowed or


producing more than expectation in given
time
Bonus can be per unit for units produced
above certain level
or
It can be per hour for time saved ALEVEL

ACCOUNTING
BY
SAJID MUNIR
0300-9466136

Halsey plan - 50% (half) of time saved is


paid at normal rate as bonus
Halsey weir Plan - 30% of time saved is
paid at normal rate as bonus
Rowan Plan -
(time taken /time allowed *hourly rate*time
saved) as bonus

ALEVEL

ACCOUNTING
BY
SAJID MUNIR
0300-9466136

June 2017 P11 Q25

41 hours *4 = 164 units

Wages 40 hours*$10= $400


Overtime 1.5 hours*$10= $15
No bonus

ALEVEL

ACCOUNTING
BY
SAJID MUNIR
0300-9466136

Nov 2021 P13 Q21

30+ (30*40%)= $42

40 hours*$30 = $1200
10 hours*$42= $420
Total wages = $1620*20

ALEVEL

ACCOUNTING
BY
SAJID MUNIR
0300-9466136

Nov 2021 P12 Q22 & June 2018 P11 Q 22

Piece rate should be based on units not hours

Multiple products being manufactured


Or it should have been unit instead of product

40 hours *$7.80 = $312


25 extra units * ($7.80*20%)= $39

Total wages 20 staff ($39+$312)= $7020

ALEVEL

ACCOUNTING
BY
SAJID MUNIR
0300-9466136

JUNE 2021 P12 Q21

Basic wages 7 hours *$20 = $140


Overtime 3 hours *$25 = $75
Bonus 2 units *$30 = $60
Nov 2020 P12 Q22

$8*30% = $2.40

Basic wages 40 hours *$8 = $320

Time needed to produce 90 units ( 90 units *1/2) = 45 hours

Time saved (45 hours - 40 hours) = 5 hours

Bonus 5 hours *$2.40 = $12


Nov 2020 P11 Q22

Basic wages 7 hours *$16 = $112

Overtime 4.50 hours *$16 = $72

Bonus 3 units *$32 = $96


Nov 2020 P13 Q21

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