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question on labour costs

Forums › FIA Forums › MA2 Managing Costs and Finance Forums › question on labour costs

  • This topic has 0 replies, 1 voice, and was last updated 10 years ago by teboho.
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  • Author
    Posts
  • May 9, 2015 at 7:11 pm #245015
    teboho
    Participant
    • Topics: 3
    • Replies: 1
    • ☆

    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/
    unit
    output 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 3000
    in 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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