Methods of Wage Fixation

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/-

6. THANK YOU