Labor Costing Question 1
The existing incentive system of a certain factory is:
Normal working week 5 days of 9 hours plus 3 late shifts of 3 hours each
Rate of payment Day work = Tshs10.00 per hour
Late shift = `15.00 per hour
Additional bonus payable Tshs25.00 per day shift Tshs15.00 per late shift
Average output per operative for 54 hours week i.e., including 3 late shifts 120 articles
In order to increase output and eliminate overtime it was decided to switch on to a system of
payment by results. The following information is obtained:
Time rate (as usual) Tshs10.00 per hour
Basic time allowed for 15 articles 5 hours
Piece-work rate Add: 20% to piece
Premium Add: 50% to time
You are required to show:
(i) hours worked;
(ii) weekly earnings;
(iii) number of articles produced; and
(iv) labour cost per article for one operative under the following systems:
(a) Existing time rate.
(b) Straight piece-work.
(c) Rowan system.
Assume that 135 articles are produced in a 45-hour week under (b), (c) and (d) and that the
worker earns half the time saved under the Halsey-Weir System. The additional bonus under
the existing system will be discontinued in the proposed incentive scheme.
In a factory guaranteed wages at the rate of Tshs18.00 per hour are paid in a 48-hour week.
By time and motion study it is estimated that to manufacture one unit of a particular product
20 minutes are taken. The time allowed is increased by 25%. During one week Abraham
produced 180 units of the product. Calculate his wages under each of the following methods:
(a) Time rate, (b) Piece-rate with a guaranteed weekly wage, (c)Halsey premium bonus and
(d) Rowan premium bonus.
A worker under the Halsey Plan of remuneration has a day rate of Tshs1,200 per week of 48
hours, plus a cost of living bonus of Tshs10 per hour worked. He is given an 8-hour task to
perform, which he accomplishes in 6hours. He is allowed 30% of the time saved as premium
bonus. What would be his total hourly rate of earnings, and what difference would it make if
he were paid under the Rowan Plan?
Calculate total monthly remuneration of three workers X, Y and Z from the following data:
(a) Standard production per month per worker - 1,000 units.
Actual production during the month
X - 850 units, Y - 750 units and Z - 950 units.
(b) Piece work rate Tshs1.00 per unit (actual production).
(c) Additional production bonus is Tshs50 for each percentage of actual production exceeding
80% over standard (e.g., 79% nil, 80% nil, 81% - `50, 82% - `100 and so on).
(d) Dearness pay fixed `200 per month