As discussed in a previous chapter, a company's wage plan may be an hourly-rate plan, a...

As discussed in a previous chapter, a company's wage plan may be an hourly-rate plan, a piece-rate plan, or a combination of the two types.

Assume that you are the cost accountant for a small manufacturing company. The company's CFO has asked your advice about implementing an incentive wage plan to increase productivity. The company's workers are not members of any union are currently paid an hourly-rate, with time-and-a-half for over 40 hours per week, and double time for holidays.

The CFO is concerned that an incentive compensation plan will encourage production line workers to speed up production and thus, compromise quality.

What advice would you give the CFO?

Expert Solution

Wages payment system can be divided broadly in following category:

(i) Payment on the basis of “Time Spent” in the factory irrespective of the output. Also know hourly rate system.

(ii) Payment on the basis of “Output” given by the worker. Also know as Piece rate system.

(iii) Incentive Plans based on “Time Spent” or “Output”.

Therefore, it is necessary to apply the suitable wage payment system in manufacturing company in order to ensure higher productivity without compromising the quality of products and services and if there is no proper wages plan then the productivity and quality of product and service will also be affected.

Hourly Rate System will affect the productivity of the organisation because there is no requirement of target or productivity and all workers are liberal to perform their duties.

Piece Rate System is efficient to control the productivity of the workers but the quality is compromise in this wage payment system because everyone is busy in productivity without maintaining the quality of product and services.

Incentive Plans are a perfect blend of both Hourly Rate System and Piece Rate System to ensure the quality and productivity of products and services of the organisation. Therefore, proper Incentive Plan should be implemented to encourage the workers to achieve the productivity and maintain quality of product and services of the organisation.

ekkarill92 answered 2 years ago

Margaret Strand’s regular hourly wage rate is $24, and she receives an hourly rate of $36...

Margaret Strand’s regular hourly wage rate is $24, and she receives an hourly rate of $36 for work in excess of 40 hours. During a January pay period, Margaret works 45 hours. Margaret’s federal income tax withholding is $91, and she has no voluntary deductions. Compute Margaret Strand’s gross earnings and net pay for the pay period. Assume that the FICA tax rate is 7.65%. (Round answers to 2 decimal places, e.g. 15.25.) Margaret’s gross earnings $ Margaret’s net pay...

Kimberly Strand’s regular hourly wage rate is $30, and she receives an hourly rate of $45...

Kimberly Strand’s regular hourly wage rate is $30, and she receives an hourly rate of $45 for work in excess of 40 hours. During a January pay period, Kimberly works 48 hours. Kimberly’s federal income tax withholding is $98.00, and she has no voluntary deductions. Assume that the FICA tax rate is 7.65%. Prepare the employer’s journal entries to record (a) Kimberly’s pay for the period and (b) the payment of Kimberly’s wages. Use January 15 for the end of...

3. Joy Lee’s regular hourly wage rate is $15, and she receives a wage of 2...

3. Joy Lee’s regular hourly wage rate is $15, and she receives a wage of 2 times the regular hourly rate for work in excess of 40 hours. During a June weekly pay period, Joy worked 50 hours. Joy’s federal income tax withholding is $90 and state income tax is $25 and FICA is 8%. Her only voluntary deduction is for retirement savings at $30 per week. Compute the following amounts for Joy’s wages for the current week. 1. Gross...

Beth Corbin’s regular hourly wage rate is $16, and she receives an hourly rate of $24 for work in excess of 40 hours.

Beth Corbin’s regular hourly wage rate is $16, and she receives an hourly rate of $24 for work in excess of 40 hours. During a January pay period, Beth works 45 hours. Beth’s federal income tax withholding is $95, she has no voluntary deductions, and the FICA tax rate is 7.65%. Compute Beth Corbin’s gross earnings and net pay for the pay period.

Maria Garza's regular hourly wage rate is $16, and she receives a wage of 1 1/2...

Maria Garza's regular hourly wage rate is $16, and she receives a wage of 1 1/2 times the regular hourly rate for work in excess of 40 hours. During a March weekly pay period, Maria worked 42 hours. Her gross earnings prior to the current week were $6,000. Maria is married and claims three withholding allowances. Her only voluntary deduction is for group hospitalization insurance at $25 per week. a. Compute the following amounts for Maria's wages for the current...

Access the hourly wage data on the below Excel Data File (Hourly Wage). An economist wants...

Access the hourly wage data on the below Excel Data File (Hourly Wage). An economist wants to test if the average hourly wage is less than $28. Assume that the population standard deviation is $8. b-1. Find the value of the test statistic. (Negative value should be indicated by a minus sign. Round intermediate calculations to at least 4 decimal places and final answer to 2 decimal places.) Hourly Wage Education Experience Age Gender 39.00 11 2 40 1 21.02...

Thomas Martin receives an hourly wage rate of $40, with time and a half for all...

Thomas Martin receives an hourly wage rate of $40, with time and a half for all hours worked in excess of 40 hours during a week. Payroll data for the current week are as follows hours worked, 48; federal income tax withheld, $350; social security tax rate, 6.0% and Medicare tax rate, 1.5%. What is the gross pay for Martin? $1, 730 $2, 080 $1, 531 $449

After a one-half increase of his current hourly wage, a man receives a new hourly wage...

After a one-half increase of his current hourly wage, a man receives a new hourly wage of $24.02. How much was his hourly wage before the increase? The hourly wage before the increase was $ ______. Please explain step by step.

Given the following information, determine the burdened hourly wage rate for a carpenter. Assume the carpenters...

Given the following information, determine the burdened hourly wage rate for a carpenter. Assume the carpenters take full advantage of the retirement benefit. Wage rate - $23.00/hour Hours worked - 45 hours/week for 30 weeks, and 40 hours per week for 20 weeks Vacation, holidays, and sick leave – two weeks at 40 hours/week Overtime – Time-and-a-half for any hours over 40 per week Gas allowance - $150/month Annual bonus - $300 Social Security – 6.2% on the first $106,800...

The file Assign1_Data contains data on the hourly wages (Hourly Wage) of all employees of a...

The file Assign1_Data contains data on the hourly wages (Hourly Wage) of all employees of a grocery chain in the Ottawa region. (a) Treating this set of data as the population, use Minitab to calculate the population mean and the population standard deviation for the Hourly Wage variable. (b) Examine a boxplot and histogram of the population data. Explain if the means of all possible random samples of size 40 from this population would form a normal distribution. (c) Using...

Question