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In a payments by results scheme employees are paid a bonus based on hours saved at the
basic wage rate. The bonus payable to the employee is calculated as the hours saved
multiplied by the ratio of time saved to time allowed
An employee produces 480 units in 72 hours. The time allowed for this number of units is
108 hours. The employee’s basic rate of pay is $10 per hour
What is the total amount payable to the employee for this job?
Can you help me with this sir?
The employee worked 72 hours, and therefore the basis pay is 72 x $10 = $720.
In addition there is a bonus and this is calculated following the instructions in the question.
The standard time allowed for the production is 108 hours. The actually took 72 hours.
Therefore they saver 108 – 72 = 36 hours.
Therefore the bonus is 36 x 36/108 = 12 x $10 = $120
Therefore the total pay = 720 + 120 = $840.
I’ve understood the time saved and the rate paid, but I still have some difficulties to understand the number of the division 36/108.
What they means? 108 is the time allowed, but what is 36? The time taken is 72 hours, why the correct time of the division is 36?
Thanks in advance
36 is the difference between the time allowed of 108 hours and the time actually taken of 72 hours.
The question specifically states that the bonus is calculated by multiplying by the time saved divided by the time allowed, which is 36 divided by 108.