Question

Which of the following statements about striving to reduce labor costs per pair produced at each of the company's facilities is true? 

• The cheapest and best way for a company to achieve lower labor costs per pair produced than rival companies is to give production workers base pay increases in the range of 4-8% annually in each geographic region where it has production facilities, keep incentive pay at or below $0.75 per nondefective-pair produced, and spend minimally (usually less than $1,000 per worker) on best practices training for production workers. 

• The most cost effective way for a company to achieve low labor costs per pair produced is to give production workers a base wage increase of 10% to 15% annually in each region where its has production facilities. 

• As long as labor productivity at each of the company's production facilities is in the range of 3,500 to 4,000 pairs produced per worker, then a company's labor costs per pair produced will be comparable to or lower than the labor costs per pair produced that other companies with production facilities in same region are able to achieve. 

• In managing production worker compensation and expenditures for best practice training, the overriding objective of company managers should be to achieve the lowest feasible labor costs per pair produced at each production facility. 

• Because of the progressively higher amounts of time it takes to produce branded footwear having a 7-star or higher S/Q rating, it is very difficult for a company producing branded footwear with a S/Q rating of 7-stars or higher to achieve labor costs per pair produced that are significantly below the industry average in those geographic regions where it has

Answer 1

A. The cheapest and best way for a company to achieve lower labor costs per pair produced than rival companies is to give production workers base pay increases in the range of 4 to 8% annually in each geographic region where it has production facilities, keep incentive pay at or below $0.75 per nondefective-pair produced, and spend minimally (usually less than $1.000 per worker) on best practices training for production workers

This method would be most effective since it would give minimal increase in base pay and would focus on rewarding non-defective work would intern result in lowered cost per pair.