Page 149 - DCOM202_COST_ACCOUNTING_I

Unit 7: Remuneration and Incentives

(iii) Deliberate absenteeism on the date of wage payment to claim fraudulent payment later, Notes
(iv) Inclusion of wrong hours when payment is done on the basis of time of work done when
payment is made on the basis of results, and
(v) Inclusion of overtime, bonus, etc. not entitled of the amount due.
To prevent fraud in payment of wages, a number of steps should be taken by the industry. These are:
(i) Attendance time should be reconciled with time booked and lost time. This will help in
detecting attendance of dummy workers.
(ii) The rate of wages should be verified from relevant schedule of wage rates,
(iii) Unclaimed wages should be paid on particular dates under strict supervision. All payments
in this respect should be made after proper scrutiny of the reason for not drawing wages on
the payment day,
(iv) Outstation workers should be paid by the cash office,

(v) Payment of wages in a factory or company is to be made preferably at the same time and
in all the departments in the presence of the departmental heads. All payments should be
made only on proper identification of industry,
(vi) The exact amount of wages should be drawn from the bank and each individual should be
paid his exact amount, and

(vii) There should be proper authorization in advance for overtime work. Actual hours worked
should not exceed that authorized. Similarly, payment for idle time, scrap and defective
production should be made only on proper authorization. Payment for incentives should
be made only on the basis of a certificate issued by the departmental authority.

Task During one week, the workman A manufactured 200 units. He received wages for
a guaranteed 45 hours week at the rate of ` 15 per hour. The time allowed to produce one
unit is 15 minutes which is increased by 20% in case of piece rate system. Calculate his
gross wages under each of the following methods of remunerating labour:
(a) Time Rate, (b) Piece Rate,

(c) Halsey Premium Plan, and (d) Rowan Premium Plan.
:
Illustration: From the following particulars, find the amount of cash required for payment of
wages in a factory for a particular month.
i. Wages for normal hours worked ` 20, 500
ii. Wages for overtime ` 2200
iii. Leave wages ` 1700

iv. Deduction of employees’ share of State Insurance Corporation ` 500
v. Employees’ contribution to Provident Fund ` 1600
vi. House rent is to be recovered from 30 employees at the rate of ` 10 per month.
Solution: The amount of cash required will be computed as shown below.

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