Case Study: Electroparts Manufacturing,Inc

Group 3

William Andrew G. Bulaquea 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

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 employers 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 youll get caught, your business may turn down its operations and youre life will end up in prison. Even if you dont get caught, youre 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 dont 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 youll lose lots of money. D. Try to formulate cost efficient production processes to minimize production cost. 1. Advantage: Youll 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 doesnt 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 dont, another problem will certainly arise; operating losses also. Consider the reality that expenses are part of income. Just make sure that youre 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.

Past point of View:

Category of Worker Assembling Eletrowelding Carpentry Quality Control Pancking and Shipping Total

Subtotal Subtotal Estimated Minimum Number (Minimum Hours (Overtime Total (Regular Increase Increase I Overall of Pay Percentag Manpowe Daily of Days wage*No. Overtime (Overtime rate*No. of pay+Overtime Medicare Social Security Wage (Ave) of Days Rate (12.5%) ) AVE Days Pay Contributions Contributions Subtotal Total (PHP) e Expense

64 64 64 64 64

25 25 25 25 25

1600 1600 1600 1600 1600 8000

8 8 8 8 8

5 5 5 5 5

40 40 40 40 40 200

1640 1640 1640 1640 1640 8200

(12.50) (12.50) (12.50) (12.50) (12.50)

(100.00) (112.50) 1527.50 (100.00) (112.50) 1527.50 (100.00) (112.50) 1527.50 (100.00) (112.50) 1527.50 (100.00) (112.50) 1527.50 7637.50

70-89 70-90 70-91 70-92 70-93

110%-140% 10%-40% 110%-140% 10%-40% 110%-140% 10%-40% 110%-140% 10%-40% 110%-140% 10%-40% 10-40%

Basis:

PhilHealth:

Social Security System:

Minimum Wage: (at present)

Effective 01 November 2012: Basic Wage COLA New After COLA Effective Minimum COLA Effective 1 Wage Integration 3 June November Rates 2012 2012
P 426.00 P 20.00 P 10.00 P 456.00

Sector/Industry

Commissioners PageNWPC Intranet

Non-Agriculture Agriculture (Plantation and Non Plantation) Private Hospitals with bed capacity of 100 or less Retail/Service Establishments employing 15 workers or less Manufacturing Establishments regularly employing less than 10 workers

P 389.00 P 389.00 P 389.00 P 389.00

P 20.00 P20.00 P20.00

P10.00 P10.00 P10.00

P 419.00 P 419.00 P 419.00

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

Present Point of View:

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

Category of Employees Assembling Elecrowelding Carpentry Quality Control

Minimum COLA(Cost New Daily of Living COLA Minimum Wage Allowance) Novembe wage (PHP) June 3 2102 r 1 2012 Rates

Hours Numbe Regular Monthly r of Pay Subtotal (# of (Ave days Employees*Wage Overtime overtime (Ave) Rate*No. of Days Pay (PHP) ) 12.5%

Overtime Pay Subtotal (# of Employees*Pa y*Hours

Total (regular Medicare Social Monthly Pay+Overtime Contribution PAG-IBIG Secutiry Pay) s(Philhealth) (2%) Contributions Subtotal Total

426 426 426 426

20 20 20 20 20

10 10 10 10 10

456 456 456 456 456

25 25 25 25 25

11,400 11,400 11,400 11,400 11,400 57,000

57 57 57 57 57

5 5 5 5 5

285 285 285 285 285 1,425

11,685 11,685 11,685 11,685 11,685 58,425

(105) (105) (105) (105) (105) (525)

(228) (228) (228) (228) (228) (1,140)

(812.7) (1,146) 10,539 (812.7) (1,146) 10,539 (812.7) (1,146) 10,539 (812.7) (1,146) 10,539 (812.7) (1,146) 10,539 (4,064) (5,729) 52,697

Packing and Shipping 426

Category of Worker Assembling Eletrowelding Carpentry Quality Control Pancking and Shipping Total

Total Pay( Individual Pay*No. of Number of Employees Individual Pay Employees

20 6 4 5 8 10,539.0 10,539.0 10,539.0 10,539.0 10,539.0 52,695.0 210,780.0 63,234.0 42,156.0 52,695.0 84,312.0 453,177.0