Question 3:

Wage negotiations are going on with the recognized Labor Union and the management wants you as a Cost

Accountant of the company to formulate an incentive scheme with a view to increase productivity. The case of four

typical workers Abdullah, Ahmed, Hamed and Helal who produce respectively 85, 122, 94 and 105 units of the

company's product in a normal day of 8 hours is taken up for study. Assuming that wages would be guaranteed at

RO 45 per hour plus HRA @ 25% of normal piece rate would be based on a standard time per unit is 4 minutes.

a. Calculate the earnings of each of the four workers using Merrick Differential Piece Rate System.

b. Suggest the management on which incentive scheme should they implement to increase productivity of

worker and justify why that incentive scheme should be implemented. (300 words)

(12 + 3 = 15 Marks).