a)Calculate what each employee would earn under the individual incentive plans s

Question

a)Calculate what each employee would earn under the individual incentive plans scenarios below. Remember that for Taylor and Merrick Plan systems, the higher rate is paid for ALL pieces produced, not just for pieces produced up to the standard.In a piece rate system in which the piece rate is $6 per piece:

Employee A produces two pieces

Employee B produces three pieces

Employee C produces five pieces

b)In a Taylor Plan system in which the standard is five pieces/hour and rates are $1.50 per piece for standard production and $2/piece for production above the standard:

Employee A produces six pieces/hour

Employee B produces five pieces/hour

Employee C produces nine pieces/hour

c)In a Merrick Plan system in which the standard is nine pieces/hour and rates are $3.00/piece for the high rate, $2.00/piece for the medium rate, and $1.50/piece for the low rate:

Employee A produces seven pieces/hour

Employee B produces eight pieces/hour

Employee C produces 11 pieces/hour

Explanation / Answer

A) Employee A compensation = No. of pieces*Rate = 2*6 = 12

Employee B compensation = 3*6 = 18

Employee C compensation = 5*6 = 30

B) Employee A has produced above standard rate, so compensation = Hourly rate*Production Rate = 2*6 = 12 per hour

Employee B has produced at standard rate, so compensation = Hourly rate*Production Rate = 1.5*5 = 7.5 per hour

Employee C has produced above standard rate, so compensation = Hourly rate*Production Rate = 2*9 = 18 per hour

C) Employee A has produced at low rate, so compensation = Hourly rate*Production Rate = 1.5*7 = 10.5 per hour

Employee B has produced at medium rate, so compensation = Hourly rate*Production Rate = 2*8 = 16 per hour

Employee C has produced at high rate, so compensation = Hourly rate*Production Rate = 3*11 = 33 per hour

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