Example of Labour Remuneration
Beneath a premium bonus scheme, workers obtained a guaranteed basic hourly minimum rate of pay in addition of a bonus of 50 percent of the time saved. So no payment is paid beyond the time permitted but the bonus that is paid at the basic hourly rate is appropriate to the accepted output only. Hence no penalty is imposed on refused output. The specified details are available for the month of January in 2003 year
|
Worker
|
A
|
B
|
C
|
|
Time allowed per unit (hrs)
|
¼
|
1/6
|
½
|
|
Units produced
|
474
|
684
|
175
|
|
Units rejected
|
54
|
84
|
25
|
|
Time taken (hrs)
|
78
|
72
|
80
|
|
Basic Pay per hour (Kshs)
|
6
|
6
|
3
|
Required
From the above information estimated for all employee
a) Bonus hours and amount of bonus paid
b) Gross wages earned
c) Labour cost for each good unit sold
Solution
Worker A
Net time saved = Expected time - Time taken
= ¼ (474 - 54) - 78 = 1/4/ X 420 - 78 = 105 - 78 = 27 hours
So Accepted time saved = 50/100 x 27 = 13.5 hrs
Consequently bonus hours = 13.5 hours
And Bonus pay = 13.5 x 6 = Shs 81
Worker B
= 1/8 (684 - 84) = Shs 100
Time saved = 100 - 72 = 28 hours
Bonus hours = 28/100 X 50 = 14 hours
Bonus pay = 14 x 6 = Shs 84
Worker C
= ½ (175 - 25) = 150/2 = 75 hours
Time saved = 75 - 80 = - 5
Bonus hours = 0
Gross Wages = Regular wage by Bonus
|
|
A
|
B
|
C
|
|
Time allowed per unit
|
¼
|
1/6
|
½
|
|
Regular pay
Bonus pay
|
78 x 6
= 468
81
549
|
72 x 6
= 432
84
516
|
75 x 3
= 225
0
225
|
Good units
|
|
A
|
B
|
C
|
|
|
474 - 54
|
684 - 84
|
175 - 25
|
|
Good units
|
= 420
|
= 600
|
= 150
|
|
Labour cost per unit of output
|
549
420
|
516
600
|
225
150
|
|
|
= 1.30
|
=0.86
|
=1.5
|