Question 1
Consider the following information concerning the monthly remuneration of three workers:
- Standard production per month per worker 1,000 units
- Actual production during the month: A, 850 units; B, 750 units; and C, 950 units.
- Piece work rate is $0.10 per unit (actual production)
- Additional production bonus is $10 for each percentage of actual production that exceeds 80% over standard
- Dearness pay fixed at $50 per month
Required: Calculate the total monthly remuneration for three workers: A, B ,and C.
Solution
Total Monthly Remuneration for Workers
Question 2
Production sections of a factory working on a job order system pay their workers under the Rown Premium Bonus Scheme. Workers are also entitled to a dearness allowance of $25 per week of 48 hours.
A worker’s basic wage is $4 per day (8 hours), and the timesheet for a week is summarized below.
Job No. | Time Allowed | Time Taken |
1 | 25 hours | 20 hours |
2 | 30 hours | 20 hours |
Idle time (waiting) 8 hours.
Required: Calculate the gross wages that a worker earns for the week.
Solution
Job No. 1 | Job No. 2 | |
Time Allowed | 25 hrs. | 30 hrs. |
Time Taken | 20 hrs. | 20 hrs. |
Time Saved | 05 hrs. | 10 hrs. |
Bonus Hours (Rowan Plan)
Gross Earnings
Job No. 1 | $22.00 |
Job No. 2 | $23.33 |
Idle time wages (8 x .50) | $4.00 |
Dearness allowance for idle time (8 x 0.50) | $4.00 |
Total wages | $53.33 |
Calculation
Question 3
An operator engaged in machining components receives an ordinary day rate of $160 per day for an 8-hour day.
The standard output for machining the components has been fixed at $0.80 per hour (time fixed for premium bonus). On a certain day, the worker’s output on the machine is 800.
Required: Find the labor cost per 100 pieces and the wages earned under the following conditions:
- If a bonus of $19 is paid per 100 extra output
- If paid for on straight piece work basis at the standard rate
- If Halsey Premium Bonus System is in use
Solution
1. Bonus of $19 is paid per 100 extra output
Standard output per hour | = 80 pieces | |
Standard output per day or for 8 hours | = 80 x 8 | = 640 pieces |
Actual output in 8 hours or in a day | = 800 pieces | |
Extra output | = 800 – 640 | = 160 pieces |
Bonus
For 100 extra output, bonus is | = $19.00 | |
For 1 extra output, bonus is | = $19.100 | |
For 160 extra output, bonus is | = (19 / 100) x 160 | = $30.40 |
Regular wages for 8 hours | = $160.00 | |
+ Bonus | = $30.40 | |
Total wages | = $190.40 |
Per 100 Piece Wages
For 800 pieces wages | = $190.40 |
For 1 piece wages | = $190.40/800 |
For 100 pieces wages | = (190.40 / 800) x 100 = $23.80 |
2. Straight Piece of Rate
Per piece wages | = 160 / 640 | = $0.25 |
For 800 pieces wages | = 800 x 0.25 | = $200 |
Per 100 pieces wages | = (200 / 800) x 100 | = $25 |
3. Halsey Premium Bonus System
Standard time for 640 pieces = 8 hrs.
Standard time for 1 piece = 8 / 640 hrs.
Standard time for 800 pieces = (8 x 800) / 640 = 10 hrs.
Time taken = 8 hrs.
Time saved or bonus hours = 10 – 8 = 2 hrs.
Formula for Halsey Premium Scheme
50% of time saved = 2 x (50 / 100) = 1 hour
Regular wages = $160.00
Bonus = (1 x 160) / 8 = $20.00
Total earnings = 160 + 20 = $180.00
Per 100 piece earnings = (180 / 800) x 100 = $22.50
Question 4
The time and motion study department of Moonlight Corporation has informed you that standard production on a specific item is 40 units per hour. During the last week of December, a worker’s record shows the following for each 8-hour day:
Monday | 280 units |
Tuesday | 300 units |
Wednesday | 320 units |
Thursday | Factory closed |
Friday | 360 units |
Saturday | 400 units |
Required: Prepare a schedule showing the worker’s daily earnings, the effective hourly rate, and the labor cost per unit under the following conditions:
- Company uses the Halsey Premium Plan with a guaranteed rate of $1.00 per hour and a premium of 50% of the time saved on production in excess of standard.
- Company uses Tailor’s Differential Piece Rate System with rates as follows: for standard production and above, 4 cents per unit; and below standard production, 3 cents per unit.
- Company uses 100% Bonus Plan and the base wage is $1.50 per hour.
Solution
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