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Labour Remuneration

# Labour Remuneration

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11/14/2012

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EMAIL: huzaifa_abdullah@hotmail.com

BROUGHT TO YOU BY: HUZAIFA ABDULLAH. ADDRESS HOUSE#45, ROAD #1, DHANMONDIDHAKA. TEL: 01674303688, EMAIL: huzaifa_abdullah@hotmail.com
1.

Alex produces tables. He has hired to employees. In recent times he had to hiredifferent workers as workers were leaving as soon as they had gained expertise in their jobs. In other words Alex was training workers for his competitors. He is concerned bythis high labour turn over and wants to resolve this situation. He is considering twomethods piece rate system and Hourly pay system. The following information isavailable:EmployeesJabbar AkkasUnits produced 420360Time allowed for each table 1010Time taken hours 2854Rate/hour (£) 99Rate/unit 44a.

Using the information from above calculate the remuneration for each employees onPiece rate and on an hourly rate. Which remuneration scheme should Alex use:i.

In point of view of the workersii.

In point of view of the Business. (2)b.

A friend of Alex suggested introducing bonus scheme. He decided to pay the employees50% of their time saved.Evaluate all the three proposals i.e. merits and demerits and help Alex decide on whichmethod should he use. (6)2.

Xyz manufacturing limited has a premium bonus scheme based on time saved.Employees receive a bonus equivalent to half the time saved on a job. Three workersare given a similar job to do. Hourly rate is fixed to £15.The standard time is 6 hours.Worker A completes it in 3 hours, while Worker B takes 4 and Worker C takes thewhole 6 hours to complete.a.

Calculate the labour cost Xyz manufacturing limited.b.

Evaluate the remuneration method.c.

Assuming that Worker A and Worker C would be working at the same speedthroughout a 35 hour week. Who would earn most? And why?

BROUGHT TO YOU BY: HUZAIFA ABDULLAH. ADDRESS HOUSE#45, ROAD #1, DHANMONDIDHAKA. TEL: 01674303688, EMAIL: huzaifa_abdullah@hotmail.com
3.

Three employees are given the same type of job to perform; the standard time is 7hours. Under the company’s payment scheme employees are paid an hourly rate of£35 and a bonus on 40% time saved.Mariam performs the job in 4 hours, while Saimon takes 6 while Khaled takes 7.
a.

Calculate the wages earned by each worker showing clearly the bonus and the basicpay.
b.

Mariam is unhappy: she has worked the quickest and yet the scheme is penalising her.Explain with valid reasons wether she is justified in being angry? (5)
c.

What safeguards must a company build into its bonus scheme to ensure that they arenot abused? (4)4.

A team of 8 workers produces a total of 400 items in an 8 hour day, for which eachmember is paid £5 per hour. The business is attempting to improve its labour productivity over the 8 hour day and has received the following proposals:i.

Reduce the team to 6 members, changing working practises, resulting in a totaloutput of 320 items per day.ii.

Increase the team to 10 members resulting in a total output of 450 items per day.iii.

Maintain the team at 8 members, but pay a bonus of £0.20 per item to be sharedequally by the team, resulting in an output of 420 items per day.a.

Required:i.

Calculate the original unit if labour cost per item.ii.

For each of the three proposals above, calculate the unit labour costper item and state what effect each proposal would have onproductivity.iii.

The business produces and sells 2000 items in each of the 48 weeksthat it operates. Calculate the annual cost saving that the business willachieve by implementing the most productive proposal.b.

Labour productivity can be improved if the total output is increasing.i.

Define labour productivity.ii.

Describe two ways in which labour productivity might be improvedwithout an increase in total output.iii.

Evaluate the importance of bonus schemes in improving productivityin a business where quality of the product is essential.