A Scanlon plan at the IEA Uniform Company used a two-year base period serval years ago to compute the base ratio. During that period, total sales amounted to $125 million, and total employee payroll costs were $55 million.
The plan operates with the following features: it pays quarterly; there is a 25% reserve pool; all bonus monies above the ratio are shared between the workers and the firm; sharing is 75% to the workers and 25% to the firm; and a negative bonus amount is absorbed by the company.
Under this plan, determine the amount of the bonus and how it is shared during the last two quarters of the previous year;
(a) third quarter during which sales were $18 million and payroll costs w ere $7 million;
(b) fourth quarter during which sales were $20 million and payroll costs were $9 million.