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.
(d) Halsey-Weir.
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.
Question 2
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.
Question 3
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?
Question 4
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