uction operation is making 150 units of a product by engaging five workers for 300 hours. However, 40 t of the units appear to have various quality problems, and the company decides to sell them as seconds at a prie each when a normal unit is sold for £150. To improve the situation, several initiatives are proposed, including a e where, for every improvement, 50 percent will be given to workers and the other 50 percent will be held by the uny. This results in a significant drop in defects as now only 10 units are faulty out of an output of 130 units. pare the productivity after Bonus with the initial productivity. ermine the appropriate bonus per hour for the workers under the bonus scheme if the cost per piece is £70 both be

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A production operation is making 150 units of a product by engaging five workers for 300 hours. However, 40
percent of the units appear to have various quality problems, and the company decides to sell them as seconds at a price
of £50 each when a normal unit is sold for £150. To improve the situation, several initiatives are proposed, including a
scheme where, for every improvement, 50 percent will be given to workers and the other 50 percent will be held by the
company. This results in a significant drop in defects as now only 10 units are faulty out of an output of 130 units.
a) Compare the productivity after Bonus with the initial productivity.
b) Determine the appropriate bonus per hour for the workers under the bonus scheme if the cost per piede is £70 both before and after the scheme.
I
U ab
Transcribed Image Text:A production operation is making 150 units of a product by engaging five workers for 300 hours. However, 40 percent of the units appear to have various quality problems, and the company decides to sell them as seconds at a price of £50 each when a normal unit is sold for £150. To improve the situation, several initiatives are proposed, including a scheme where, for every improvement, 50 percent will be given to workers and the other 50 percent will be held by the company. This results in a significant drop in defects as now only 10 units are faulty out of an output of 130 units. a) Compare the productivity after Bonus with the initial productivity. b) Determine the appropriate bonus per hour for the workers under the bonus scheme if the cost per piede is £70 both before and after the scheme. I U ab
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