Premium Bonus System
The premium bonus system is a cost accounting strategy that encourages workers to be more productive and lowers production costs.
Under these methods, standard time or a fixed time is established for performing a job. In case the task is completed in less than the standard time the saved time is shared between employee and the employer.
A standard time is specified for doing a certain activity or job under the premium bonus technique, and employees are rewarded for finishing the task or job within the standard time or earlier. The premium bonus is often computed as a percentage of the employee's hourly rate and is dependent on the amount of time saved during the course of the assignment.
By compensating employees for doing tasks more quickly, the premium bonus technique can encourage workers to boost their productivity and efficiency. This may result in lower labour expenses and higher firm profitability. To prevent any detrimental effects on employee morale and the calibre of the work, the strategy must be carefully executed.
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