Question

Question 3: Nizwa Handcraft LLC is one of the leading handcraft company in Oman. Ray, Joy, Hay and Nay are four craft men employed by Nizwa Handcraft LLC on the carving of two models of traditional sculptures for the local market known as “AA11” and “ZZ22”. In Nizwa Handcraft LLC, the worker work for six hours per day, a worker is paid RO 2,700 as normal rate per hour plus D.A @ 20% of normal piece rate. Standard time per unit is 20 seconds. Out of the works is as follows – Ray 1,000 units, Joy 1,200 units, Hay 1,500 units and Nay 800 units. The production manager has provided you with the labor cost details and asked you to:

a. Calculate the earnings of the four craft men using Merrick Differential Piece Rate System.

b. State three reason in your opinion why there should be different rate for different level of performance for the craft men. (300 words)

Answer 1

The Merrick Differential Piece-Rate System is a modification of Taylor’s differential piece-rate system in which three piece-rates are used to distinguish between the beginners, the average workers, and the superior workers, against two piece-rates in Taylor’s system.The worker is paid the straight price rate up to 83% of the standard output, 10 % above the normal rate for producing between 83% – 100% and 20% above the normal rate for producing more than 100% of the standard output.

Standard Output

1080

20 seconds for 1 unit 3 units in a Min 180 units a Hour 1080 in 6 hours

Name	Product	Efficiency	Rate	Standard Rate Hourly basis	Standard Rate for 6 hours	DA @ 20%	Produce * DA@20%	Basic Wage	As per Merrick Differential Rate system
Ray	1000	0.93	10 % Above Normal Rate	2700	16200	3	3000	19200	21120
Joy	1200	1.11	20 % Above Normal Rate	2700	16200	3	3600	19800	23760
Hay	1500	1.39	20 % Above Normal Rate	2700	16200	3	4500	20700	24840
Nay	800	0.74	Normal Rate	2700	16200	3	2400	18600	18600

Reasons for Differential rate for different level of Performance for the craft men.

1	If the craftsmen is given differential rate on the basis of Performance it encourages them to do work in an efficient way.
2	More the production more is the amount received for the produced so the efforts put in is properly being recognised with a better pay.
3	There is no competition within the other crafstman but the comparison with the standard quantity, so it is a better way to recognise and give the pay, if there is an intenal competition then few craftsman would be recognised not all, so the others craftsman wont be encouraged to produce efficiently more quantity.