Page 159 - DCOM202_COST_ACCOUNTING_I

Unit 7: Remuneration and Incentives

Notes
The additional targets might require the consultant to document the range of suitable
products discussed with the client and the reason for the final choice out of these. Consultants
would only qualify for commission on satisfactory completion of these details - which will
be open to scrutiny during file checks and/or if sale statistics suggest undue emphasis of a
broker selling one product type. By making consultants aware that MI will monitor sales of
individual product by consultant the firm will further encourage them to consider a wider
range of similar products and be ready to justify the final choices they make.
Complaints
On the complaints side, a simple reward programme to encourage staff to suggest ways
to prevent complaints re-occurring would benefit both customers and the broker. The
reward programme could include points for the number of recommendations made and
a financial reward where a recommendation is implemented and shown through MI to
reduce complaints and improve service in that area.

7.4 Summary

z z Wages as a means of providing income for the workers become the only source of income
which determines their economic survival in the society, so they try to force the employers
to follow a method of wage or remuneration payment.

z z Fair wages is that wages which the labour gets for his work which is just near to minimum
wages and living wages. Generally, current rate of wages, being paid in the organisation
are known as fair wages.

z z With a view to bring about improved relations between labour and management in modern
age and effort has been made that labour should get a fair deal at the hands of managers
of organisations.

z z With this end in view, however, various proposals were under taken at the industries
conference in 1947 as a resolution known as the industrial truce resolution was passed.

z z And the three basic methods of wage payment or remuneration, i.e. time rate method,
piece rate method and incentive plans or schemes explain well in detail the remuneration
and incentives.

7.5 Keywords

Differential Rate: An amount added or deducted from base rate.
Group Bonus: An incentive wage divided among a number of workers.
Living Wages: A wage enough to maintain a normal standard of living.
Nominal Wages: Average wage.
Payroll Statement: Statement disclosing the details of the employees.

Real Wages: True values of wage.

7.6 Review Questions

1. Describe the methods of remunerating labour. State the merits and demerits of each method.
2. Discuss the advantages and disadvantages of the piece rate method of payment of wages.
Do you consider that workers remunerated by reference to this method should be required
to maintain time records?

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