Reduce the Rate of Cost for the Input Used to Produce the Output
Use the same type of input and the same activities, but pay less for the unit of input employed in producing the output. A reduction in rate is equivalent to a reduction in the number of inputs for the same ICD. For example, if a person who makes $10 per hour could produce the same amount of output as a person making $20 an hour, the substitution of the $10 person for the $20 person in the process would be equivalent to cutting the number of people required to do the work by 50%.
Sometimes it is possible to break the price of a purchase into its component parts. Then the company may seek to substitute a less expensive component for a more expensive component to reduce the effective rate the company pays on its purchases.
Optional components of the rate paid: Penalty/bonus, including equity and profit sharing:
|2||4213||1998||All regular workers will be entitled to a $750 signing bonus. That will be in lieu of any increase in wages or fringe benefit contributions in the first year of the five year contract. Roadway intends to amortize this payment.|
|1||6321||2007||As insurance costs rise, some companies are penalizing workers for their unhealthy habits. Employees who are overweight, smoke or have high cholesterol or who do not participate in wellness programs will pay more for health insurance. Clarian Health will charge employees who smoke $5 a pay check.|
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