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labour cost Q

Forums › FIA Forums › MA1 Management Information Forums › labour cost Q

  • This topic has 4 replies, 3 voices, and was last updated 8 years ago by secondstar.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • December 24, 2016 at 10:05 am #364369
    bluewolf08
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    A business currently uses a picework scheme to pay its direct labour. Employees are paid $3.50 per unit for the first 50 units and $4.00 per unit for every unit above 50 produced in a week.

    on average an employee produces 60 unit in a 38 hour working week.

    management are considering changing to a per hour labour remuneration scheme, where employees would be paid a basic wage of $5.00 per hour for 36 hour working week with overtime paid at a premium above basic wage of $2.40. There is not expected to be a change in the level of productivity.

    what is the change in unit labour cost from the picework system to the proposed hourly rate system?

    A $0.41 increase
    B $0.33 decrease
    C $0.41 decrease
    D $0.50 decrease

    December 24, 2016 at 10:10 am #364370
    bluewolf08
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    i need to know how to find the employee number ?
    to complete the question

    or there is another way to solve is ?!!!

    December 24, 2016 at 12:04 pm #364377
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10594
    • ☆☆☆☆☆

    Current average wages: 3.50 x 50 + 4 x 10 = 215

    Proposed wages: 5 x 36 + (5+2.40) x 2 = 194.80

    Fall in weekly wage = 20.20

    Spreading this over 60 units gives a fall of 0.33 per unit produced. (should really be 0.34 if rounded properly)

    December 26, 2016 at 4:04 pm #364488
    bluewolf08
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    Proposed wages: 5 x 36 + (5+2.40) x 2 = 194.80

    can u explain this step (5+2.40) x 2 ????

    December 27, 2016 at 6:05 am #364508
    secondstar
    Member
    • Topics: 16
    • Replies: 220
    • ☆☆☆

    @bluewolf08

    The total hours to be worked are still 38 since 60 units are made in 38 hours.

    Proposed wages = Normal hours x rate + Overtime hours x rate

    5 is basic rate for overtime and 2.4 is Overtime Premium

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