A plastic manufacturing company is operating with an employment of 128 skilled workers. The product is in great demand. The company desires to…

(a) Working Notes: 1. Actual time taken to produce 12,500 pieces = No. of working days in the month × No. of working hours per day of each worker × No. of workers = 25 days × 8 hrs. × 128 workers = 25,600 hours 2. Total time wages of 128 workers per month: = No. of working days in the month × No. of working hours per day of each worker × Hourly rate of wages × No. of workers = 25 days × 8 hrs. × ₹ 30 × 128 workers = 7,68,000 3. Time saved per month: Time allowed per piece to a worker 2.5 hours No. of units produced during the month by 128 workers 12,500 pieces Total time allowed to produce 12,500 pieces (12,500 × 2.5 hours) 31,250 hours Actual time taken to produce 12,500 pieces 25,600 hours Time saved (31,250 hours – 25,600 hours) 5,650 hours 4. Bonus under Halsey scheme to be paid to 128 workers: Bonus = (50% of time saved) × hourly rate of wages = 50/100 × 5,650 hours × ₹ 30 = 84,750 Total wages to be paid to 128 workers are (₹ 7,68,000 +84,750) ₹ 8,52,750, if company considers the introduction of Halsey Incentive Scheme to increase the employee productivity. 5. Bonus under Rowan Scheme to be paid to 128 workers: Bonus = Time taken / Time allowed × Time saved × hourly rate = 25,600 hours / 31,250 hours × 5,650 hours × ₹ 30 = 1,38,854.4 Total wages to be paid to 128 workers are (₹ 7,68,000 + 1,38,854.4) ₹ 9,06,854.4, if company considers the introduction of Rowan Incentive Scheme to increase the Employee productivity. (i) (a) Effective hourly rate of earnings under Halsey scheme: (Refer to Working Notes 1, 2, 3 and 4) = Total time wages of 128 workers + Total bonus under Halsey scheme / Total hours worked = 8,52,750 / 25,600 hours = 33.310 (b) Effective hourly rate of earnings under Rowan scheme: (Refer to Working Notes 1, 2, 3 and 5) = Total time wages of 128 workers + Total bonus under Rowan scheme / Total hours worked = 9,06,854.4 / 25,600 hours = 35.424 (ii) Efficiency in % on introduction of the incentive schemes = Time allowed as per standard / Time Taken × 100 = 31,250 hours / 25,600 hours = 122.07% Labour efficiency has increased by 22.07% (iii) (a) Saving in terms of direct Employee cost per piece under Halsey scheme: (Refer to Working Note 4) Employee cost per piece (under time wage scheme) = 2.5hours × ₹ 30 = 75. Employee cost per piece (under Halsey scheme) = Total wages paid under the scheme / Total number of units produced = 8,52,750 / 12,500 = 68.22 Saving per piece: (₹ 75 - 68.22) = 6.78 (b) Saving in terms of direct Employee cost per piece under Rowan Scheme: (Refer to Working Note 5) Employee cost per piece under Rowan scheme = 9,06,854.4 / 12,500 = 72.548 Saving per piece = 75 - 72.548 = 2.452 (iv) Since the company has assured 15% increase over present earnings i.e.7,68,000 which comes to 8,83,200 and total wages under halsey scheme and rowan scheme are - 8,52,750 and - 9,06,854.4 respectively, so the company is advised to select the rowan scheme of wage payment to fulfill its requirement of 15% increase.