Forums › ACCA Forums › ACCA MA Management Accounting Forums › question on labour costs
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- May 8, 2015 at 9:39 am #244773
a company manufactures a single product. currently, the company employs a team of 6 direct operatives who produce a total of 2500 units of the product in a 40 hour week. the hourly rate of pay for all operatives is 8 eoros.
in an effort to improve productivity, and thus to increase output in the normal 40 hour week, an incentive scheme has been suggested. the scheme, which the 6 operatives hav agreed to trial over a 4 week period, provides a differential piecework payment in addition to a reduced basic rate per hour. details of the scheme are:
basic hourly rate 4 euros/ hour
differential piecework rates
1st 2500 units of output in a week 0.375/ unitoutput 2501 to 3000 units in a week 0.45/ unit on additional units over 2500
output over 3000 units in a week 0.60/ unit on additional units over 3000in the 1st week of the trial, total output was 3080 units in the 40 hours worked
required:
(a)…
(b) for the incentive scheme, calculate:(i) the labour cost/ unit, based on the 1st week of the trial;
(ii) the level of output in a 40 hour week at which total labour cost would be the same as under the existing time rate payment system
could u help me with (i) (ii) of this question
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