MGT402 GDB Solution spring 2012

Determine effective hourly earnings of each worker under the new incentive plan
Special Wages Rate = 300 Rs. Per worker per hour
Working Hours = 8 Hours a day
No. of Days = 30
Total Working Hours = 30 x 8 = 240
Per day earning of worker = 300 x 8 = 2400
Total Time Saved
Time saved per day = 8-6 = 2 Hours
Work time per day = 6
Time saved per day earning = (6 x 300) = 1800
Total time saved = 2 Hours daily x 30 days = 60 Hours
Total time saved of 20% = 60 x 20% = 12
40% of 20% of the total time saved = 40% x 12 x 300 = 1440
30% of the total time saved = 60 x 30% = 18
25% of the next 30% of the total time saved = 25% x 18 x 300 = 1350
15% of the remaining time saved = 15% (60-12-18) x 300 = 4.5 x 300 = 1350
Total Saved time per day earning = 1800 + 1440 + 1350 + 1350 = 5940
Effective hourly earnings per worker per hour = Total Earning/ Effective working Hours
5940 = 990 Answer




Does this incentive plan suits the company?
Requirement # 02
No, the incentive plan does not suits the company as under the new plan time saving occurs but effective hourly earning becomes very high i.e. 990 as compared to per hour earning of 300.

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