A manufacturer introduces new machinery into his factory with the result that the production per worker is increased. The workers are paid by results, and it is agreed that for every 2% increase in the average individual output, an increase of 1% on the rate of wages will be paid. At the time the machinery is installed, the selling price of the products falls by 8 1/3%.

You are required to show the net saving in the production costs which would be required to offset the losses expected form the reduced turnover and bonus paid to workers.

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Additional data: First period Second period 250 14,000 No. of workers No. of articles produced Wages paid Total sales 350 16,800 Rs. 33,600 Rs. 75,600