Contents
Meaning of Incentive Wage Method
Both time rate and piece rate systems discussed above have their own merits and demerits. Incentive plans attempt to combine the good parts of both of the system.
Thus incentives plans envisage basic rate usually on time basis applicable to all workers and incentive rates to the more efficient among them as extra compensation for their meritorious performance in terms of time, costs and quality.
The incentive rates may take the form of bonus or premium. Bonus means the payment to workers of the entire benefit accruing from saving in costs, time improvement in quality etc.
Premium means the benefits accruing to the firm as the result of higher output or better quality will be shared equally or on some agreed basis between the management and the workers.
The main objective of incentive plan is to induce worker to produce more to earn a higher wage. Producing more in the same period of time should result in higher pay for the worker.
Because if greater number of units produced, it should also result in lower cost per unit for fixed factory cost and also labour cost.
ALSO READ- Incentive Plans For Wage Payment Workers | Advantages, Disadvantages
Methods of Wage Payment
Generally wages payments are done in two ways-
(a) according to time.
(b) according to work (piece).
On these two basis, many incentive wage systems have been developed in order to take advantages of both these systems. As such incentive system may be called as mixed form of the above two methods. In brief, method of wages payment can be divided into three parts.
1. Time Wage Rate Method.
2. Piece Wage Rate Method.
3. Incentive Wage Rate Methods.
Related Links
- What is Installation of a Costing System | Conditions and Factors
- What are the practical difficulties in installing cost accounting
- What is technique of Costing | Various techniques of Costing
- What is Material or Inventory Control | Techniques of Materials Control
- What is FIFO Method | advantages and disadvantages
- What is LIFO method | Advantages and Disadvantages
- What is Periodical or Annual Inventory Control System | Limitations
- Methods of Pricing Material Issues | Cost Methods
- What is Cost of Labour Turnover | Causes, Effects Classification
- What is meant by idle time | Definition, Causes, Control
- What is meaning of overtime work | Reason, Disadvantages
- HIFO method of inventory valuation |Advantages, Disadvantages
- What is two Bin System | Meaning of Bin Card and Specimen
- What is Meaning of NIFO Method | Advantages, Disadvantages
- What is Market Price Method or Replacement Price Method | Advantages, Disadvantages
- What is average cost method of Inventory valuation | Advantages and Disadvantages
- What is Meaning of Weighted Average Price Method | Advantages and Disadvantages
- Meaning of Material Losses | Types and Treatment
- What is Difference Between Waste and Scrap
- What is Meaning of Obsolete Material |Causes, Treatment and Losses
- What are Methods of Labour Remuneration | Advantages, Disadvantages
- What is Meaning of Piece Wage Rate Method | Advantages Disadvantages
- What is Meaning of Remuneration
- What is Collective Bonus Plan | Suitability, Advantages, Disadvantages
Disclaimer
Disclaimer: www.efullform.in does not own this book, PDF Materials Images, neither created nor scanned. We just provide the Images and PDF links already available on the internet. If any way it violates the law or has any issues then kindly mail us; itsabhi356@gmail.com
