Know about Piece Rate or Piece Wage System from cost accounting experts

This program is also known as transaction by results. When income are compensated on that foundation the outcome of the employees without considering the- time taken in performing perform, it is classified as item salary.

Thus under this program, the employees are compensated on foundation variety of perform done, i.e., per device of outcome, per article, per job, investment, etc. For processing complete payment of employees, a pre-determined amount device of outcome is increased by the complete systems created. The amount is set with your energy and energy and motion studies. The formula for salary calculations under this program is:

Wages = Variety of systems created x Rate of salary per unit
For example, personnel produce 8 systems in one day and the amount of income per device is 10. The complete income for the day would be: 8 x Rs. 10 = Rs. 80

The item amount program is of the following types:

(a) Straight Piece Rate:

This is the simplest and the most everyday sort of item amount program. Each operation, job or device of development is classified as a item. The salary amount set for each item is called item amount. The personnel is compensated income on the foundation perform done regardless of time taken to perform the work. The salary of personnel is determined by growing the amount of systems created by him by the specified amount for each device.
Wages = Variety of systems created x Wage amount per unit
The item amount is set with the help of perform study. Conventional here we are at each device is confirmed first. Piece amount is then determined with reference to on an per hour basis amount of salary. For example, if on an per hour basis amount of salary is Rs. 10 and the normal time per device is 90 minutes,

(b) Piece Rate with Finished Time Rate:

Under this program, employees are actually compensated on the foundation outcome and if the item amount income fall below time amount income, the personnel is compensated promptly amount base.
The difference will be retrieved from his income when he brings in more than the set income. For example, in a manufacturing concern, the item amount is Rs.4 per device, time amount is Rs.80 per day of 8 hours and the daily set perform is 20 systems.
If personnel produce 18 systems in a day, brings in Rs.72 (Rs.4 x 18) on the foundation item amount. But he will get Rs. 80 as his time income which is Rs. 8 more than what he brings in on item amount base and this amount of Rs.8 compensated to him in excess will be retrieved from his income whenever his item amount income surpass time amount income.
But if the word produces 22 systems in a day, he will get Rs.88 (Rs.4 x 22) on item amount base. This program has all the value of both plenty of some time to item amount systems and eliminates demerits of both. But it is a very complex and challenging program for the employees comprehends.


c) Differential Piece Rate System

Under the differential item amount program, the transaction of income is created to labor on the foundation item prices different with the stage of performance of employees.
The program provides for greater rewards to more effective employees. Under this program, there is more than are item amount to compensate effective employees and to encourage the less effective employees to improve. Payment at normal item amount is created for perform performed with and up to the normal stage of performance.
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