Definition: Clark’s Dynamic Theory of Profit was propounded by J.B. Clark, who believed that profits arise in the dynamic economy and not in the static economy. The static economy is one in which the things do not change significantly or remains unchanged. Such as, the population and capital remain stationary, goods continue to be homogeneous, production process remains … [Read more...] about Clark’s Dynamic Theory of Profit
Walker’s Theory of Profit
Definition: Walker’s Theory of Profit, also called as a Rent Theory of profit was propounded by F.A. Walker, who believed that profit is regarded as a rent of differential ability that an entrepreneur may possess over the others. Walker’s theory of profit works on the same principle as that of land rent, which is the difference between the yields of least and most effective … [Read more...] about Walker’s Theory of Profit
Theories of Profit
Definition: Profit is the financial benefit realized from the business activity when the revenues generated exceeds the costs and expenses incurred in the operation of such activities. Simply, the total cost deducted from total revenue yields profit. The profits of the organization depend on the successful management of business operations, i.e. how well an entrepreneur … [Read more...] about Theories of Profit
Types of Profit
Definition: Profit refers to the financial gain obtained when the revenue generated from the business operations exceed the expenses and costs incurred in carrying out the business activity. The term “profit” imply different meanings to different people. Such as, profit is regarded as income to the equity holder, wages to the labor, rent to the owner, interest to the money … [Read more...] about Types of Profit
Emerson Plan
Definition: Under Emerson Plan, the standard time for the completion of a task is fixed against which the actual performance of the workers is measured. The worker’s efficiency can be determined by dividing the time taken by the standard time. In Emerson Plan, the worker is paid only the time rate for the efficiency up to 67%. At 100% efficiency, the worker is paid time … [Read more...] about Emerson Plan
Gantt Task System
Definition: Under Gantt Task System, the standard time is fixed for the completion of a task based on a careful time and motion study. The worker’s actual performance is compared against the standard time to determine his efficiency and make the payments accordingly. The Gantt task system guarantees the worker’s time-rate for the level of output below the standard. Thus, if … [Read more...] about Gantt Task System
Merrick Differential Piece-Rate System
Definition: The Merrick Differential Piece-Rate System is a modification of Taylor’s differential piece-rate system in which three piece-rates are used to distinguish between the beginners, the average workers, and the superior workers, against two piece-rates in Taylor’s system. The worker is paid the straight price rate up to 83% of the standard output, 10 % above the … [Read more...] about Merrick Differential Piece-Rate System
Taylor’s Differential Piece-Rate System
Definition: Taylor’s Differential Piece-Rate System was introduced by F.W. Taylor, who believed that the workers should be paid on the basis of their degree of efficiencies. Under this method, with the help of Time and Motion Study, the standard time for the completion of a job is fixed on the basis of which the performance of the workers is evaluated. Taylor’s differential … [Read more...] about Taylor’s Differential Piece-Rate System
High Standard Hour System
Definition: Under High Standard Hour System, the earnings of the worker vary in the same proportion to the level of output, as in the case of the standard hour system, but the increment in the earnings for each additional unit of output above standard is significant. In other words, the high standard hour system implies that the worker’s earnings start increasing once the … [Read more...] about High Standard Hour System
High Piece Rate System
Definition: High Piece Rate System is an incentive scheme similar to the straight piece-work system, in which the worker’s earnings are in proportion to his level of output, but however, the increment in earnings for each additional unit of output above the standard is much greater. In other words, high piece rate system implies that the increment in the worker’s earnings … [Read more...] about High Piece Rate System