Theory:
1. What do you mean by control of labour cost? Explain./ Control of labour cost means
wage cut .Do you agree with this? Why or why not? Explain.
2. What do you mean by idle time and what are the causes of idle time?
3. What do you mean by labour turnover and what are the causes of labour turnover?
4. Write down the differences between preventive and replacement cost in terms of
labour turnover.
b) XYZ Ltd employs its workers for a single shift of 8 hours for 25 days in a month.
The company has recently fixed the standard output for a mass production
and introduced an incentive scheme to boost output .Details of wages payable to the
workers are as follows:
Basic wages – piece work wages @ Tk 2 per unit subject to a guaranteed
minimum of wages Tk. 60 per day.
Dearness allowance Tk 30 per day
Incentive bonus :
Standard output per day per worker 40 units
Incentive bonus upto 80% efficiency Nill
Incentive bonus for efficiency above 80% Tk 60 for every 1%
increase
No of days worked Output (units)
Worker A 25 days 820 units
Worker B 18 days 500 units
Worker C 25 days 910 units
Worker D 24 days 780 units
Calculate the earnings of each of the workers (6)
Solution:
Basic wage:
Piece rate: Day rate:
A = 820* 2=1640 25*60=1500
B= 500* 2=1000 18*60=1080
C=910*2= 1820 25*60=1500
D = 780*2= 1560 24*60=1440
Bonus:
% efficiency of the worker:
A=(820/25*40)*100=82%
B=(500/18*40)*100=69.4%
C= (910/25*40)*100=91%
D= (780/24*40)*100=81.25%
Amount of Bonus:
A=2*60=120 Tk
B=Nill
C=11*60=660 Tk
D=1.25*60= 75 Tk
Statement of earnings:
Particulars A B C D
Basic 1640 1080 1820 1560
Bonus 120 - 660 75
Dearness 25*30=750 18*30=540 25*30=750 24*30=720
allowance
Total 2510 1620 3230 2355
Halsey premium method:
The standard production in a company is 25 units per hour. For the first week of April a
worker’s record was as follows:
Monday 140 units 8 Hour
Tuesday 160 units 8 Hour
Wednesday 190 units 8 Hour
Thursday 210 units 8 Hour
Friday 230 units 8 Hour
Requirements: [8]
You are required to draw up a schedule showing the workers daily earnings, the
effective hourly rate of earning and the labour cost per unit if the company uses:
=Halsey premium plan with a guaranteed rate of Tk 5 per hour and a premium of
70% of the time saved on production in excess of production .
Solution:
Days Productio Time Time Time Basic Bonus Total Hourl Labour
n units allowed Take save wag Earning y rate cost
n d e s per
unit
Monday 140 140/25 8 - 40 - 40 5 40/14
= 0
Tuesday 160 5.6 8 - 40 - 40 5 =.29
Wednesda 190 6.4 8 - 40 - 40 5 .25
y 210 7.6 8 .4 40 .4*3.5 41.4 5.18 .21
Thursday 8.4 (5*70%)=1. .20
230 8 1.2 40 4 44.2 5.53
Friday 9.2 1.2*3.5=4.2 .19
Labour cost per unit: Total earnings/ No of unit produced
Emersion Efficiency system:
3. Hourly wage rate Tk 2
Output fixed for a 44 hour week 400 units
Bonus rate:
Upto 67% efficiency Hourly rate
Between 67% to 80% efficiency Bonus 4%
Between 80% to 85% efficiency Bonus 6%
Between 85% to 90% efficiency Bonus 10%
Between 90% to 95% efficiency Bonus 15%
Between 95% to 100% efficiency Bonus 20%
Actual weekly output 200,250,270,300,336 ,400,420,440
Req:
Calculate earnings of the workers and labour cost per unit
Solution:
% efficiency of the worker : Actual output/Standard output*100
Labour cost per unit: Total earnings/Actual weekly output
Fixed Actual % % of Basic Bonus Total Labour cost
weekly weekly efficiency bonus Earnings per unit
output output of the
worker
400 200 50% _ 88 _ 88 88/200=.44
400 250 62.5% _ 88 _ 88 .35
400 270 67.5% 4% 88 3.52 91.52 .33
400 300 75% 4% 88 3.52 91.52 .30
400 336 84% 6% 88 5.28 93.28 .28
400 400 100% 20% 88 17.6 105.6 .26
400 420 105% 25% 88 22 110 .26
400 440 110% 30% 88 26.4 114.4 .26
Prob 1:
In a factory workers are paid on a differential piece rate system where 80% piece rate below
standard and 120% piece rate at or above standard. From the following particulars calculate
the earnings of the worker A,B,C.
Standard production 10 units per hour
Time rate Tk 1 per hour
Production in a day of 9 hours
A 75 units
B 90 units
C 110 units.
Solution:
Rate per hour Tk 1
Unit produced per hour 10
Normal Piece Rate : 1/10=.1 Tk
Low piece rate below standard 80% of .1=.08 Tk
High piece rate at or above standard 120% of .1=.12 Tk
Standard unit produced in a day 9 *10= 90 units
A= 75*.08=6 Tk
B= 90* .12=10.8 Tk
C= 110* .12=13.2 Tk
Prob 3:
Calculate earnings of the worker A,B &C under Straight and Merrick differential piece rate
system from the following particulars :
Normal rate per hour Tk 5.4
Standard time per unit 1 minute
Output per day are as follows:
Worker A 390 units
Worker B 450 units
Worker C 600 units
Working hours per day 8
Solution:
Piece rate: Rate per hour/ unit produced per hour
=5.4/60=0.09 Tk
Straight piece rate system:
A=390* .09=35.1
B =450*.09=40.5
C= 600*.09=54
Merrick differential piece rate system:
Upto 83.33% normal rate
Between 83.33% to 100% 110 % of normal rate
Above 100% 130% of normal rate
% efficiency of the worker:
A= (390/480)*100=81.25
B = (450/480)*100=93.75
C= (600/480)*100=125
Standard production for a day 60*8=480 units
Piece rate applicable:
A=.09
B=.09*110%=.099
C=.09*130%=.117
Earnings:
A= 390*.09=35.1 Tk
B=450*.099=44.55 Tk
C=600*.117=70.2 Tk
