Purpose of Rowan Premium Bonus Scheme:

• An incentive scheme to reward direct labor for saving time during the production process

• This method rewards the production worker with a proportion of the time saved

Formula:

Proportion of time saved = Time taken/Time allowed x Time saved

Illustration:

Mr. A is being paid $9 per hour. The time allowed to complete a task is 12 hours. The actual time taken by Mr A to complete the task is only 8 hours

Question: compute the gross pay of Mr A after completing the task.

Solution:

Mr A’s gross pay

= ( 8 hours x $9) + ( Time taken/Time allowed x Time saved x Rate per hour)

= (8 hours x $9) + ( 67% x 4 hours x $9)

= $96.12