QUESTION 7

Productivity Today Limited is a newly established company that manufactures ladies'

designer clothes for a departmental store. It has one employee in each section of its sewing

department. Details of one working period are shown below.

Name of employee Nancy Progress Naomi

Output (units) 270 200 220

Standard hours per unit 0.18 0.25 0.2

Time taken in hours 40 38 36

Rate per hour (K) 12,500 10,500 12,000

Rate per unit (K) 2,000 2,500 2,400

(a) Calculate the earnings of each employee as determined by each of the following methods:

(i) Hourly rate (6 Marks)

(ii) Piece work (6 Marks)

(iii) Individual bonus scheme according to the 100% participation scheme with 100 as

standard performance. (6 Marks)

(b) Calculate:

(i) The employees' individual performances (3 Marks)

(ii) The average performance for the three employees. (2 Marks)

Performance is calculated as (Standard time allowed/Actual time spent)

(c) Management is now in the process of choosing and adopting a payment method to be used

by the company's payroll. Suggest, with reasons, which one of the three methods above

should be chosen. (2 Marks)