Calculate the earnings of workers A, B and C under the Straight Piece Rate System and Merrick’s Differential Piece Rate System from the

following particulars.

Normal rate per hour: Rs. 5.40

Standard time per unit: 1 minute

Output per day is as follows.

Worker A – 390 units

Worker B – 450 units

Worker C – 600 units.

Working hours per day are 8

Earnings of Workers:

                             Rates Systems

Worker  Straight Piece   Merrick's Differential Piece

A                $35.10                   $28.08

B                $40.50                  $32.40

C               $54.00                  $64.80

Explanation:

a) Data:

Normal rate per hour: Rs. 5.40

Standard time per unit: 1 minute

Output per day is as follows.

Worker A – 390 units  

Worker B – 450 units

Worker C – 600 units

Working hours per day are 8

b) Calculations:

i) Standard units per day = 8 x 60 minutes = 480 units

ii) Earnings per day is as follows.

Worker A – 390 units :

Straight piece Wages = 390 / 60 x $5.40 = $35.10

Merrick's Earnings = 390/60 x $5.40 x 0.8 = $28.08

Worker B – 450 units :

Straight piece Wages = 450 / 60 x $5.40 = $40.50

Merrick's Earnings = 450/60 x $5.40 x 0.8 = $32.40

Worker C – 600 units:

Straight piece Earnings = 600 / 60 x $5.40 = $54

Merrick's Earnings = 600/60 x $5.40 x 1.2 = $64.80

c) The factor for multiplying the rate is obtained by dividing the units produced by the number of minutes in an hour, in order to convert output to a rate based on the hour.

d) The standard output per day helps Merrick in calculating the weights to be assigned to each worker and differentiate the slow worker from the superior worker (hence, the name: Merrick's Differential Piece Rate).  The slow workers (those who produce below the standard output) are paid a rate lower than the standard rate by adding a weight of 0.8  as a punishment while the superior worker is assigned a weight of 1.20 as a reward for good performance.  Meanwhile, a standard performer who produced 480 units will be paid the normal rate or weighed as 1.0.  

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