Management of the Robinson Manufacturing Company Requests That You Calculate

Essay

Management of the Robinson Manufacturing Company requests that you calculate the effect of two different wage payment plans upon employee earnings and also on the unit labor cost of Product B12.
The following information is available: Ten pieces of Part 1567 are required for one unit of Product B12.The plant works a 5-day week and an 8-hour day,totaling 40 hours per week.No overtime premium pay is to be considered in your analysis.
During a selected week,the following pieces of Part 1567 were produced: An agreement with the union requires a minimum rate of $10.00 per clock hour be paid to employees.
a.Calculate the labor cost each day of the week for an employee under:
(1)
the hourly-rate plan.(2)
the piece-rate plan.
b.If the company could anticipate a steady production level of 250 units of Part 1567 each day,which plan would you recommend to the company's management? Why?