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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 decreasei need to know how to find the employee number ?
to complete the questionor there is another way to solve is ?!!!
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)
Proposed wages: 5 x 36 + (5+2.40) x 2 = 194.80
can u explain this step (5+2.40) x 2 ????
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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