1). Operators assemble pumps at an hourly rate of $10.00.The standard time for the assembly is 20minutes. Direct material costs are $19.50/pump. Indirect labor andother overhead is calculated simply at a rate of $5.00/hr, while general office expenses are calculated at a rate of $2.00/hr. Whatis the manufacturing cost for one pump?
2). An incentive plan employing a kicker is in use. Below standard performance the worker is guaranteed a rate of $6 per hour and above standard performance the worker is paid $9.20 per hour. A job is studied and a rate of 0.036 hours per piece is set. What is the direct labor cost per piece at the following efficiencies:
a. 50 percent?
b. 80 percent?
c. 98 percent?
d. 105 percent?
e. 150 percent?
3). A company would like to evaluate two incentive schemes that take effect once the worker exceeds standard performance. In the first case the benefits are split 50/50 between the worker and the company. In the second case, the worker receives a kicker up to 120% earnings and then maintains level performance up to 150% , after which all of the earnings go to the worker.
a. Plot the normalized unit labor costs for each scheme.
b. Derive the equations for worker earnings and unit labor costs for each scheme.
c. Find the point at which the two plans break even.
d. Which do you think th
e company would prefer?