3.12 Intermediate: Calculation of earnings

(a) A company is proposing to introduce an Incentive scheme into its factory.

Required:

Three advantages and three disadvantages of individual incentive schemes.

(b) The company is undecided on what kind of scheme to introduce.
Required:
From the following information calculate for each employee his earnings, using (i) guaranteed hourly rates only (basic pay), (ii) piecework, but with earnings guaranteed at 75% of basic pay where the employee fails to earn this amount, and (iii) premium bonus in which the employee receives twothirds of time saved in addition to hourly pay.

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Employees A B C D Actual hours worked 38 36 40 34 Hourly rate of pay 3 2 2.50 3.60 Output (units) X 42 120 120 Y 72 76 270 Z 92 50 Standard time allowed (per unit): X: 6 minutes; Y: 9 minutes; Z: 15 minutes Each minute earned is valued at 0.05 for piecework calculation. (16 marks)