BROUGHT TO YOU BY:

HUZAIFA ABDULLAH
TEL: 01674303688
ADDRESS: HOUSE#45, ROAD #1
DHANMONDI, DHAKA
EMAIL: huzaifa_abdullah@hotmail.com
 1. Alex produces tables. He has hired to employees. In recent times he had to hire
different workers as workers were leaving as soon as they had gained expertise in their
jobs. In other words Alex was training workers for his competitors. He is concerned by
this high labour turn over and wants to resolve this situation. He is considering two
methods piece rate system and Hourly pay system. The following information is
available:

Employees
Jabbar Akkas
Units produced 420 360

Time allowed for each table 10 10

Time taken hours 28 54

Rate/hour (£) 9 9

Rate/unit 4 4

a. Using the information from above calculate the remuneration for each employees on
Piece rate and on an hourly rate. Which remuneration scheme should Alex use:
i. In point of view of the workers
ii. In point of view of the Business. (2)
b. A friend of Alex suggested introducing bonus scheme. He decided to pay the employees
50% of their time saved.
Evaluate all the three proposals i.e. merits and demerits and help Alex decide on which
method should he use. (6)

2. Xyz manufacturing limited has a premium bonus scheme based on time saved.
Employees receive a bonus equivalent to half the time saved on a job. Three workers
are given a similar job to do. Hourly rate is fixed to £15.The standard time is 6 hours.
Worker A completes it in 3 hours, while Worker B takes 4 and Worker C takes the
whole 6 hours to complete.

a. Calculate the labour cost Xyz manufacturing limited.

b. Evaluate the remuneration method.

c. Assuming that Worker A and Worker C would be working at the same speed
throughout a 35 hour week. Who would earn most? And why?

BROUGHT TO YOU BY: HUZAIFA ABDULLAH. ADDRESS: HOUSE#45, ROAD #1, DHANMONDI
DHAKA. TEL: 01674303688, EMAIL: huzaifa_abdullah@hotmail.com
 3. Three employees are given the same type of job to perform; the standard time is 7
hours. Under the company’s payment scheme employees are paid an hourly rate of
£35 and a bonus on 40% time saved.

Mariam performs the job in 4 hours, while Saimon takes 6 while Khaled takes 7.

a. Calculate the wages earned by each worker showing clearly the bonus and the basic
pay.

b. Mariam is unhappy: she has worked the quickest and yet the scheme is penalising her.
Explain with valid reasons wether she is justified in being angry? (5)

c. What safeguards must a company build into its bonus scheme to ensure that they are
not abused? (4)

4. A team of 8 workers produces a total of 400 items in an 8 hour day, for which each
member is paid £5 per hour. The business is attempting to improve its labour
productivity over the 8 hour day and has received the following proposals:
i. Reduce the team to 6 members, changing working practises, resulting in a total
output of 320 items per day.
ii. Increase the team to 10 members resulting in a total output of 450 items per day.
iii. Maintain the team at 8 members, but pay a bonus of £0.20 per item to be shared
equally by the team, resulting in an output of 420 items per day.
a. Required:
i. Calculate the original unit if labour cost per item.
ii. For each of the three proposals above, calculate the unit labour cost
per item and state what effect each proposal would have on
productivity.
iii. The business produces and sells 2000 items in each of the 48 weeks
that it operates. Calculate the annual cost saving that the business will
achieve by implementing the most productive proposal.
b. Labour productivity can be improved if the total output is increasing.
i. Define labour productivity.
ii. Describe two ways in which labour productivity might be improved
without an increase in total output.
iii. Evaluate the importance of bonus schemes in improving productivity
in a business where quality of the product is essential.

BROUGHT TO YOU BY: HUZAIFA ABDULLAH. ADDRESS: HOUSE#45, ROAD #1, DHANMONDI
DHAKA. TEL: 01674303688, EMAIL: huzaifa_abdullah@hotmail.com
 5. A team of 8 staff members produces a total of 160 items of output per 8 hour day, for
which each member is paid £5 per hour. The company is attempting to improve its
labour productivity and has received the following four proposals:
Option-1
The team is reduced to 6 members, with changes in working practises resulting in
total output of 100 items per day.
Option -2
The team is increased to 10 members resulting in a total output of 220 items per day.
Option- 3
The team remains at 8 members, a differential piecework rate system would operate
paying £2.50 per item to the first 100 items produced per day, and £2.00 per item
thereafter. This would result in a total output of 200 per day.
Option-4
A bonus is paid of 10 pence per item to be shared equally among the 8 staff members
of the team, resulting in total output rising 200 items per day.

Requirerd:
a. Distinguish between the terms value of money and productivity. (8)
b. Calculate:
i. The original labour cost per item.
ii. For each of the four options, calculate the unit labour cost per item and
state the effect on the productivity.
iii. What problems might arise when changing a labour remuneration
system?

6. A company is considering paying the workers of research and development on the

piece rate system.

To what extent do you agree or disagree with this proposal. What payment scheme
would you suggest? (8)

7. i. It is some times said of premium bonus schemes that it is the savings in the
overheads which provides the funds out of which the bonus is paid. How can this be
so? (5)

iii. What incentives do employers have on premium bonus schemes? (4)

BROUGHT TO YOU BY: HUZAIFA ABDULLAH. ADDRESS: HOUSE#45, ROAD #1, DHANMONDI
DHAKA. TEL: 01674303688, EMAIL: huzaifa_abdullah@hotmail.com