Example of Labour Remuneration
Beneath a premium bonus scheme, workers obtained a guaranteed basic hourly minimum rate of pay in addition of a bonus of 50 percent of the time saved. So no payment is paid beyond the time permitted but the bonus that is paid at the basic hourly rate is appropriate to the accepted output only. Hence no penalty is imposed on refused output. The specified details are available for the month of January in 2003 year
Worker

A

B

C

Time allowed per unit (hrs)

¼

1/6

½

Units produced

474

684

175

Units rejected

54

84

25

Time taken (hrs)

78

72

80

Basic Pay per hour (Kshs)

6

6

3

Required
From the above information estimated for all employee
a) Bonus hours and amount of bonus paid
b) Gross wages earned
c) Labour cost for each good unit sold
Solution
Worker A
Net time saved = Expected time  Time taken
= ¼ (474  54)  78 = 1/4/ X 420  78 = 105  78 = 27 hours
So Accepted time saved = 50/100 x 27 = 13.5 hrs
Consequently bonus hours = 13.5 hours
And Bonus pay = 13.5 x 6 = Shs 81
Worker B
= 1/8 (684  84) = Shs 100
Time saved = 100  72 = 28 hours
Bonus hours = 28/100 X 50 = 14 hours
Bonus pay = 14 x 6 = Shs 84
Worker C
= ½ (175  25) = 150/2 = 75 hours
Time saved = 75  80 =  5
Bonus hours = 0
Gross Wages = Regular wage by Bonus

A

B

C

Time allowed per unit

¼

1/6

½

Regular pay
Bonus pay

78 x 6
= 468
81
549

72 x 6
= 432
84
516

75 x 3
= 225
0
225

Good units

A

B

C


474  54

684  84

175  25

Good units

= 420

= 600

= 150

Labour cost per unit of output

549
420

516
600

225
150


= 1.30

=0.86

=1.5
