Question 2 (10 Marks) In Andalusia Ltd, wages are paid on a weekly basis (40 hours per week) at a guaranteed hourly rate

of RM2.80. It is estimated that the time required to manufacture a particular product was 12 minutes.

However, the time allowed of 25% is to be added (for normal idle time, setting up time, etc.). During

the first week of June 2020, Roslan produced 250 units of the product.

Required:

Compute Roslan's wages for the particular week using the following methods of wage payment:

a. time rate.

[2 marks]

b. piece rate with a guaranteed weekly wage.

[3 marks]

c. Halsey's premium bonus scheme.

[5 marks]

a. Time rate = RM 2.80 x 40 hours = RM 112

b. Piece Rate = RM 0.70 x 250 units = RM 175

c. Halsey premium bonus scheme:

Pay per hour = RM 2.80,

Therefore Wages = Normal Wages + Bonus

= (RM 2.80 x 40) + 50% (RM 2.80 x 22.5)

= RM 112 + 31.5 = RM 143.50

Explanation:

a) Time for each product unit = 12

Piece rate = RM 2.80/60 x 15 = RM 0.70 per unit

b) Under Halsey Premium Bonus Scheme:

Hours used in production = 40 hours

Hours for producing 250 units = 62.5 hours

Gain in hours = 22.5 hours (62.5 - 40)

c) Time rates are wages based on the amount of time spent at work. The usual form of time rate is the weekly wage or monthly salary. Usually the time rate is fixed in relation to a standard working week (e.g. 40 hours per week).

d) Wages based on piece rate (also known as piecework) is a pay based on number of units or pieces created rather than the number of hours worked.  In other words, the more “pieces” an employee produces, the more the employee is paid.

e) Under Halsey Plan, the standard time for the completion of a job is fixed and the rate per hour is then determined. The usual bonus share paid to the worker is 50% of the time saved multiplied by the rate per hour (time-rate).