Per hour costs and units

gareth1985

Hi there,

this looks straight forward but I'm struggling a bit with this. I don't understand the question 100%.

The basic pay structure and bonus pay makes sense, but I just want to know how does the 30 units equal at £1.50?

Please help.

Thanks,

Gareth

Vickie30

Hi Gareth,

So...
If Justin works 35 hours a week and his output is 10 units an hour: 35x10: 350 - this is his standard production and what he is budgeted to make. His actual units are 380, so if you take the actual units - budgeted units (380-350) you will see that he made 30 more than he was budgeted to do. Any unit extra he produces is paid a bonus of £1.50 (30 units x £1.50) = £45.
Has this helped at all? If not I will try and explain it another way.
Vickie

gareth1985

Hi Vickie, thanks a lot for your helpful quick reply.

I understand how that works perfectly now.