Question

Question 8 (June Supp 2015)

Xwama Cultural Village and Traditional Restaurant is one of the emerging fast food outlets around Windhoek. Established about five years ago, the company is perceived to be doing well in terms of promoting traditional food. However, it is financial performance has not been that good over the past two years.

“I don’t think we would be said to be doing well in terms of financial performance especially over thepast two years as none of the two years we could reach our target. One of the possible contributing factors could be our employee turnover as we have recorded a high number of employees leaving the company year-by-year. I think we need to introduce some wage incentive schemes that could motivate our employees as a way of mitigating this issue of high employee turnover -narrates the managingdirector of Xwama Cultural Village and Traditional Restaurant”.

Public holiday

MARKS

Suppose you have been appointed as the company’s cost accountant consultant. The managing directoris of the opinion that the company should implement either of the following schemes, namely: (a)Halsey-Weir premium bonus system, or (b) Rowan premium bonus system.

The following information was extracted from the clock card of Priscilla Petrus who works as a waitress at Xwama during the month of February 2015. Her basic rate of pay is N$ 60.00 per hour. Her clock card shows the following shifts that she worked during the month of February 2015.

Type of Shift

Day Shifts Night Shits

Time allowed in hours

35 25

Time taken in hours

20 15

Required: Determine Priscilla’s basic wages and her bonus based on:

8.1. Halsey-Weir premium bonus system;

8.2. Rowan premium bonus system.

Marks

7 7

4

8.3. From the company’s perspective, with the help of your answers in3.1 and 3.2., which wage incentive scheme would you recommend to Xwama? Substantiate your answer.

8.4. Apart from the three mentioned wage incentive schemes, what do 2 think would be the appropriate way of remunerating employees of
Xwama?

Answer 1

Halsey-Weir premium bonus system:

For day shift:

Basic wages: N$ 60 X 20 = N$1200

Bonus: (35-20) X N$60 X 30% = N$ 270

For night shift:

Basic wages: N$ 60 X 15 = N$900

Bonus: (25-15) X N$60 X 30% = N$ 180

Net pay: N$1200+N$270+N$900+N$180 = N$2550

Rowan Premium Bonus System:

For day shift:

Basic wages: N$60 X 20 = N$1200

Bonus: (Time saved/time allowed)*time taken*rate

time saved/time allowed=15/35=0.43

Bonus= 0.43 X 20 X N$60 = N$516

For night shift:

Basic wage = N$60 X 15 = N$900

Bonus: (Time saved/time allowed)*time taken*rate

time saved/time allowed= 10/25=0.40

Bonus= 0.40 X 15 X N$60 = N$360

Net pay: N$ (1200+516+900+360) = N$2976

I think rowan premium bonus scheme would be better because of higher and more attractive bonus amount which would help them retain more employees.