Case Study:

Electroparts Manufacturing,IncGroup 3

Members:

William Andrew G. Bulaqueña

Ricci A. Tilos

Nympha Marie R. Rubin

Sheila Mae N. Chua

Tristram A.Gamo

John Paul T. Antiquiera

Safie Jane M. Ayco

Mngt 12-G

Prepared For:

Asst. Prof. Dina Wong-Remoto

I. Central Problem

A. How much will be the net increase in the manpower expense of EMI in lieu of the mandated increase in minimum wage?

II. Objectives

A. To compute the estimated monthly increase in the manpower expenses.

B. To account for the net increase in employee benefits and wages.

C. To account for the changes on the employer’s counterpart of the

employees’ Medicare and SSS contributions.

D. To account for the price adjustments to meet the desired profitability of the business.

III. Alternative courses of action

A. Compute the estimated monthly increase in manpower expenses and adjust the prices of the products to cover the

expenses.

B. Hire and bribe a Certified Public Accountant to falsify the appropriate financial instruments.

C. Do not tell the employees about the latest minimum wage legislation.

D. Try to formulate cost efficient production processes to minimize production cost.

E. Give rewards and incentives for better production and sales.

IV. Evaluation

A. Compute the estimated monthly increase in manpower expenses and adjust the prices of the products to cover the expenses.

1. Advantage: You are able to comply with the legal requirements and to provide your employees with salary increases.

2. Disadvantage: The price hike or increase makes your products less affordable to the general public. You may lose a number of customers.

B. Hire and bribe a Certified Public Accountant to falsify the appropriate financial instruments.

1. Advantage: You will be able to save money and trick stakeholders and the government for your personal gain.

2. Disadvantage: If you’ll get caught, your business may turn down its operations and you’re life will end up in prison. Even if you don’t get caught, you’re conscience will probably ran after you.

C. Do not tell the employees about the latest minimum wage legislation.

1. Advantage: You will be able to save money and they will not go on strikes because they don’t know this as of now.

2. Disadvantage: But in the long run, if they discover this, they may lose your trust on you, file a case against you and your business may turn down its operations and you’ll lose lots of money.

D. Try to formulate cost efficient production processes to minimize production cost.

1. Advantage: You’ll be able to lower your production cost; thus, save money.

2. Disadvantage: However, the quality or the products may be compromise if the change in production process doesn’t leave up to the original standards.

E. Give rewards/incentives to workers

1. Advantage/s:Motivate the workers to improve production, thus, may induce the possibility of decreasing overtime works. Lessen overtime pay since they receive incentives. Greater performance.

Disadvantage/s:Employees tend to be dependent on the rewards/incentives they will be receiving, thus, lessening their performance. Increase expenses. Bias in rewarding

3. Training the staff

V. Recommendation

We recommend A, D, and E. Just be fair. Do not consider falsifying documents as a solution to the problem caused by the Republic Act. Also, do not even think about trying to trick your employees and workers. Human resources are the most important assets of a business. Take the risk of increasing product prices because if you don’t, another problem will certainly arise; operating losses also. Consider the reality that expenses are part of income. Just make sure that you’re spending your money on the things worth spending for. One good example is giving your employees the salary increase they deserve. This will obviously make them happy and motivate their job performance. The quality of your products reflects the image of your business. You have to balance effectiveness and efficiency. Develop innovative ideas to attend more customers.

VI. Conclusion

Compute the necessary adjustments or increases on the expected manpower expenses of your business and make sure this conforms to the legal requirements stated by the law.

Category of Worker

Minimum Daily Wage

Number of Days (Ave)

Subtotal (Minimum wage*No. of Days

Overtime Rate (12.5%)

Hours (Overtime

) AVE

Subtotal (Overtime rate*No. of

Days

Total (Regular pay+Overtime

PayMedicare

ContributionsSocial Security Contributions Subtotal

Overall Total

Increase of Pay (PHP)

Percentage

Estimated Increase In Manpower Expenses

Assembling 64 25 1600 8 5 40 1640 (12.50) (100.00) (112.50) 1527.50 70-89 110%-140%10%-40%

Eletrowelding 64 25 1600 8 5 40 1640 (12.50) (100.00) (112.50) 1527.50 70-90 110%-140%10%-40%

Carpentry 64 25 1600 8 5 40 1640 (12.50) (100.00) (112.50) 1527.50 70-91 110%-140%10%-40%

Quality Control 64 25 1600 8 5 40 1640 (12.50) (100.00) (112.50) 1527.50 70-92 110%-140%10%-40%

Pancking and Shipping 64 25 1600 8 5 40 1640 (12.50) (100.00) (112.50) 1527.50 70-93 110%-140%10%-40%

Total 8000 200 8200 7637.50 10-40%

Past point of View:

Basis:

PhilHealth:

Social Security System:

Minimum Wage: (at present)

Commissioners

Page NWPC Intranet

Effective 01 November 2012:

Sector/Industry

Basic WageAfterCOLA

Integration

COLA Effective 3 June

2012

COLA Effective

1 Novembe

r 2012

New Minimum Wage

Rates

Non-Agriculture P 426.00 P 20.00 P 10.00 P 456.00Agriculture (Plantation and Non Plantation)

P 389.00 P 20.00 P10.00 P 419.00

Private Hospitals with bed capacity of 100 or less

P 389.00 P20.00 P10.00 P 419.00

Retail/Service Establishments employing 15 workers or less

P 389.00 P20.00 P10.00 P 419.00

Manufacturing Establishments regularly employing less than 10 workers

P 389.00 P 20.00 P 10.00 P 419.00

a/ Covers the Cities of Caloocan, Las Pinas, Makati, Malabon, Mandaluyong, Manila, Marikina, Muntinlupa, Paranaque, Pasay, Pasig, Quezon, San Juan, Taguig, and Valenzuela and Municipalities of Navotas and Pateros. b/ Grants the following to all minimum wage workers in the private sector in the region:a. Integration of P22.00 COLA under W.O. No. RB-NCR-16 into the basic wage.b. P30.00 COLA per day to be given into two (2) tranches:

Category of Employees

Minimum Daily Wage (PHP)

COLA(Cost of Living Allowance) June 3 2102

COLA November 1 2012

New Minimum wage Rates

Number of days (Ave)

Regular Monthly Pay Subtotal (# of Employees*Wage Rate*No. of Days

Overtime Pay (PHP)

Hours (Ave overtime) 12.5%

Overtime Pay Subtotal (# of Employees*Pay*Hours

Total (regular Monthly Pay+Overtime Pay)

Medicare Contributions(Philhealth)

PAG-IBIG (2%)

Social Secutiry Contributions Subtotal Total

Assembling 426 20 10 456 25 11,400 57 5 285 11,685 (105) (228) (812.7) (1,146) 10,539

Elecrowelding 426 20 10 456 25 11,400 57 5 285 11,685 (105) (228) (812.7) (1,146) 10,539

Carpentry 426 20 10 456 25 11,400 57 5 285 11,685 (105) (228) (812.7) (1,146) 10,539

Quality Control 426 20 10 456 25 11,400 57 5 285 11,685 (105) (228) (812.7) (1,146) 10,539

Packing and Shipping 426 20 10 456 25 11,400 57 5 285 11,685 (105) (228) (812.7) (1,146) 10,539

57,000 1,425 58,425 (525) (1,140) (4,064) (5,729) 52,697

Computation of Estimated Increase in Manpower Expense of Electroparts Manufacturing, Inc

Category of Worker Number of Employees Individual Pay

Total Pay( Individual Pay*No. of Employees

Assembling 20 10,539.0 210,780.0

Eletrowelding 6 10,539.0 63,234.0

Carpentry 4 10,539.0 42,156.0

Quality Control 5 10,539.0 52,695.0

Pancking and Shipping 8 10,539.0 84,312.0

Total 52,695.0 453,177.0

> P20.00/day upon effectivity of this Wage Order> P10.00/day effective November 1, 2012W.O. issued 17 May 2012, published at Philippine Daily Inquirer on 19 May 2012. Present Point of View: