Question
Can you draw a graph for this scenario? Initially, boxes limited paid 10$ per hour to the workers . According to the new manager, an
Can you draw a graph for this scenario?
Initially, boxes limited paid 10$ per hour to the workers . According to the new manager, an overtime wage plan was instituted. As per the plan workers earned 10$ per hour for the first 8 hours, then 15$ per hour in excess of 8 hours. Let's assume that the workers are doing 3 hours overtime work that is the workers are working for 11 hours.
therefore cost of 1 labour=8x10$+3x15$ = 125$
Thus, as per the overtime scheme 1 labour earns 125$ for 11 hours of work.
Now let's assume that the manager decides to double the wage from 10$ to 20$. In this scenario, cost of 11 hours of work will be
cost of 1 labour= 20x11 = 220$
Thus, we can see that doubling the wage costs 220$ which is more than overtime cost of 125$ for the same number of hours.
Since, the manager has to increase production, she will require workers to work more than 8 hours. Thus, she will choose the overtime plan instead of doubling the wage because of low labour cost. Boxes Limited will meet its increased demand as well as meet its production targets at a relatively lower labour cost.
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