Do fast

1. A company uses an old method of machining a part manufactured for sale. The estimates of operating details for the year 198788 are as under: No. of parts to be manufactured and sold 30,000 Raw materials required per part : 10 kg. @ Rs. 2 kg. Average wage rate per worker : Rs. 40 per day of 8 hrs. Average labour efficiency 60%. Standard time required to manufacture one part : 2 hrs. Overhead rate Rs. 10 per clock hour. Material handling expenses 2% of the value of raw materials. The company has a suggestion box scheme and an award equivalent to three months' saving in labour cost is passed on to the employee whose suggestion is accepted. In response to this scheme, a suggestion has been received from an employee to use a special Jig in the manufacture of the aforesaid part. The cost of the Jig which has life of one year is Rs. 3,000 and the use of the Jig will reduce the standard time by 12 minutes. Required: (i) Compute the amount of award payable to the employee who has given the suggestion. () Prepare a statement showing the annual cost of production before and after the implementation of the suggestion to use the Jig and indicate the annual savings. (ii ) State the assumptions on which your calculations are based