Labour Problem

The  existing incentive system of a certain factory is:

Normal working week:: 5 days of 9 hours each plus resorting to overtime of 3 hours for 3 days.

Rate of payment           : For day work - Rs 20 per hour.For overtime - Rs 30 per hour.

Additional bonus payable : Rs 25 if  worker is not resorting to overtime,Rs 40 is the worker resorts to overtime.

 

Average output per operative for 54 hour week i.e normal working hours plus 3 hours late sitting for 3 days- 120 articles

 

In order to increase output and eliminate overtime it was decided to switch on to a system of payment by results.The factory is considering the introduction of some incentive scheme or to make payment on piece work basis. Assuming that 135 articles are produced in a 45 hour week and the additional bonus under the existing system is discontinued in the proposed scheme,calculate :

 

Weekly earnings in a) existing time rate scheme b) Rowan plan c) Halsey plan

 

The following information is obtained:

Time rate Rs 20

Basis time allowed for 15 articles is 5 hours 

Premium bonus - Add 50% to time

 

 

 

Please help 

 

Replies (1)

If a company wants to incentivise, piece rate wages is the best method. From the above, Rowan plan is generous because it is paying for standard time and standard rate. If an employee’s performance is low, even then he gets additional wages for additional hours later. Coming to Halsey plan, it looks conservative because it is measuring standard time first and fixing the labor rate per hour. This way, a company will understand how many units can be produced in a standard time and if desired output needs additional hours, it will reduce the labor rate accordingly to 9 hour wages. Some people can call it extortion and this is because all labor rates are predetermined. So, piece rate wages solely depend upon an individual and his output. 

I guess you can do the math and budgeted labor variance analysis to experiment with

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
08 September 2026
Semi-Qualified Assitant

Subrahmanyam & Sivudu CA Firm

Hyderabad

CA Inter

View Details
Company
13 August 2026
Chartered Accountant (FP&A)

Client of Trellis Consulting

Gurgaon

CA

View Details
Company
18 August 2026
Audit Assistant - Remote / Work From Home

CA ANOOP P K & ASSOCIATES

Kozhikode

CA Inter

View Details
Company
04 September 2026
CA inter Or ca finalist

A Jaiswal and company

Lucknow

CA Final

View Details
Company
ARTICLESHIP 01 September 2026
Articles

Saini Pati Shah & Co LLP, Chartered Accountants

Mumbai

CA Foundation

View Details
Company
19 August 2026
Chartered Accountant - Financial Consolidation & Reporting

Synergy Keystone

Mumbai

CA

View Details
Company
24 August 2026
Semi-Qualified CA/CA Finalist - Tax, GST, Audit & Accounts

Bharat Shah & Associates

Mumbai

CA Inter

View Details
Company
28 August 2026
Assistant Manager

NRS AND ASSOCIATES

Kozhikode

CA Inter

View Details