ZED Limited employing 50 skilled workers is considering the introduction of incentive scheme-either Halsey scheme (with 50% bonus) or Rowan scheme of wage payment for increasing the labour productivity to cope up the increasing demand for the product by 40%. It is believed that proposed incentive scheme could bring about an average 20% increase over the present earnings of the workers; it could act as sufficient incentive for them to produce more.

Because of assurance, the increase in productivity has been observed as revealed by the figures for the month of April, 2004.

Required:

(i) Calculate the effective rate of earnings under the Halsey scheme and the Rowan scheme.
(ii) Calculate the savings to the ZED Limited in terms of direct labour cost per piece.
(iii) Advise ZED Limited about the selection of the scheme to fulfill their assurance.

Transcribed Image Text:

Hourly rate of wages (guaranteed) Average time for producing one unit by one worker at the previous Performance (This may be taken as time allowed) Number of working days in the month Number of working hours per day of each worker Actual production during the month Rs. 30 1.975 hours 24 8 6,120 units