Piecework Pay Calculation in Manufacturing: 38 Workstations in Bimp

The company is fictional. Every action in Bimp is a real product feature.

Piecework pay calculation in manufacturing is done in Bimp by the “Piecework pay” document: it takes the number of pairs from a posted assembly, multiplies it by the operation rate and puts the amount into the cost of the pair. The accountant only has to check the sums. At the fictional footwear factory Stepwell the monthly calculation shrank from two working days to two hours (notionally).

How was piecework pay counted at 38 workstations?

Stepwell (a fictional company) has 65 people. Piece-rate pay per pair applies at 38 workstations in cutting, lasting and stitching, while the rest of the staff, supervisors and engineers included, are on salary. The factory makes shoes in series, in batches.

At the end of the month the accountant counted piecework pay from spreadsheets, and it took two working days, or 16 hours. Rates change, she offset advances by hand, and twice a quarter the foremen argued about a sum because they could not check it. Labor went into the cost of a pair as one general figure, and nobody split it per model.

An example from one batch of the model “Ashby”. The factory makes 1,200 pairs, and the rates are €0.45 for lasting and €0.30 for upper stitching. In one month there are ten such batches, which is 12,000 pairs.

How does piecework pay calculation in manufacturing work in Bimp?

There are six steps, and each rests on a help article.

Step 1. The employee card

In Payroll → Employees the accountant creates a card: full name, position (“Laster”), hire date, status “Hired”. A user is linked to the card so the worker can sign in, and a barcode if needed. A personal rate is entered in the “Salary accruals” block and carries more weight than the general one from the directory (Employee card).

Step 2. Rates in the directory

In Catalogs → Accrual types the rows “Lasting” (€0.45), “Upper stitching” (€0.30) and the foreman’s salary appear. Each rate is described once and then chosen in documents. When upper stitching goes up to €0.33, the accountant changes one number. For 12,000 pairs the difference is 12,000 × 0.03 = €360 a month, and piecework pay per pair rises from €0.75 to €0.78 (Accrual types).

Step 3. Piecework pay from the assembly

The shop has built a batch, and the manager posts the “Assembly” document with the “Operations” tab filled in. Bimp creates piecework pay automatically, and it can also be created with Create based on from a posted assembly. The operation type is “Production”, the allocation is “By products”, and the creation date and the accrual month belong to one month (Piecework pay, Piecework scenarios, Assembly).

The “Accruals” tab shows every employee, the number of operations and the rate. The foreman opens the document and checks his own pairs. The whole chain from the assembly to the payout is visible on the “Links” tab.

Materials per pair cost €10.50 (notionally), and piecework pay for these two operations is €0.75. The cost of a pair is €11.25, and of the whole batch 1,200 × 11.25 = €13,500. To keep the example short, other piecework operations and overhead are not counted here.

Step 4. An advance in the middle of the month

On the fifteenth the laster Carter asks for an advance. The accountant creates a “Salary payout” document with the “Offset advance” flag, chooses the accrual type and enters €250. The money leaves the cash desk or the account, and the advance does not increase period expenses. When the accrual is created, the advance is offset with the “Offset advances” button (Advances).

Step 5. Salary and bonuses of supervisors

For the 27 salaried employees the accountant creates a “Salary accrual” document with the expense item “Production staff salary”. Three foremen have a salary of €700 and a 10% bonus, which is €70 each. In total 3 × 700 + 3 × 70 = €2,310. This sum reduces the period’s profit but is not part of the cost of a specific batch. The payout is created based on the accrual (Salary accrual, Salary payout).

Step 6. The debt report and the payment calendar

In the “Payment” block of the piecework and salary payouts the accountant adds a date to the payment calendar, and the finance director sees when the money is needed. The debt to each employee is shown by the “Salary accrued and paid” report (report).

What does the owner see in the reports?

The “Salary accrued and paid” report at the end of the month. Debt equals accrued minus paid.

Let us check the sums. Carter completed 1,500 pairs of lasting: 1,500 × 0.45 = €675, and after an advance of €250 the remaining €425 is owed. Hughes did 1,000 pairs of upper stitching: 1,000 × 0.30 = €300, and the debt after a €125 advance is €175. Foreman Reed is accrued a salary of €700 and a bonus of €70, together €770. In the “Total” row 675 + 300 + 770 = €1,745 is accrued, 250 + 125 = €375 is paid, and the debt is 1,745 - 375 = €1,370.

For monthly piecework pay the same rates give the overall picture. On lasting, 8 workers at €675 make €5,400 (12,000 pairs × 0.45), and on upper stitching 12 workers at €300 make €3,600 (12,000 pairs × 0.30). Together 5,400 + 3,600 = €9,000, and this sum matches ten batches of €900.

This changes the argument with a foreman. Before, he came to the accountant with his own notebook entry, and the two figures could be compared only through spreadsheets. Now the foreman opens the “Piecework pay” document, finds his row on the “Accruals” tab and sees the pairs, the rate and the amount. If there are fewer pairs than he wrote down, they look into one assembly the document was created from, and it takes a few minutes.

Does Bimp calculate payroll taxes?

No. Bimp calculates management payroll: accruals by rates and salaries, advances, payouts, debt and the share of labor in the cost of a product. The system does not calculate payroll taxes or statutory contributions, which accounting keeps in its own program. Read the sums in the debt report as accrued before taxes.

What does this give the factory?

For a factory with piece rates at dozens of workstations, two things matter: the speed of the calculation and trust in the sum. Both appear when accrual takes data from a production document and the manual spreadsheet is gone.

The accountant checks sums that the document has already calculated, and by notional measurements this takes two hours instead of sixteen. The argument with a foreman ends when the document is opened: pairs, rate and amount are there. A rate changes in one place, so the accountant does not recalculate spreadsheets at every tariff change. Advances do not get lost: the paid sum stands in the “Paid” column, and the debt in the report equals the remainder. The cost of a pair carries its own €0.75 of labor, so the owner compares models by the actual price of the work.

The formula, a rate from a time norm and a sample work order are covered in the article How to Calculate Manufacturing Cost When Excel Keeps Getting It Wrong, which also shows how labor combines with materials in a product. Bimp is a cloud ERP for manufacturers, built in Ukraine, where these documents are linked to the warehouse and to cost. The Bimp for manufacturers page collects all features.

Scenario limits

The scenario covers two piecework operations, an advance, a salary and the debt report. Cutting and other operations are accrued by the same scheme but are not shown in the example. The salaries of supervisors are not part of the batch cost. Bimp does not calculate payroll taxes. HR records (timesheets, vacations, sick leave) are not described in the help articles used here, so the scenario does not cover them. The cut from two days to two hours is notional, and in your company it depends on the number of operations and the quality of the rates entered.

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