Question: 2. (This Question addresses CLO2)

The existing incentive system for Al Amir SAOG is as under:

Normal working week: 5 days of 8 hours each plus 3 late shifts of 3 hours each.

Rate of Payment: Day work: OMR 1.6 per hour

Late shift: OMR 2.500 per hour

Average output per operator for 49 hours week, i.e., including 3 late shifts = 120 units

In order to increase the output and eliminate overtime, it was decided to switch on to a system of payment by results. Following information is obtained.

Time rate as usual: OMR 1.600

Basic time allowed for 15 units: 5 hours

Piece-work rate: Add 20% to basic piece rate

Premium bonus: Add 50% to time.

Required:

Prepare a statement showing hours worked, weekly earnings, number of articles produced and labour cost per unit for one operator under the following wage systems;

a. Existing Time rate

b. Straight Piece Rate

c. Rowan System

d. Halsey Premium Plan

Assume that 135 units are produced in a 40-hour week under straight piece work, Rowan premium system and Halsey Premium system above and the operator earns half the time saved Under Halsey Premium system.