1 .Lean Principles Active Apparel Company manufactures various styles of men's casual wear. Shirts are cut and assembled by a workforce that is paid by piece rate. This means that they are paid according to the amount of work completed during a period of time. To illustrate, if the piece rate is $0.15 per sleeve assembled, and the worker assembles 700 sleeves during the day, then the worker would be paid $105 (700 × $0.15) for the day's work. The company is considering adopting a lean manufacturing philosophy by organizing work cells around various types of products and employing pull manufacturing. However, no change is expected in the compensation policy. On this point, the manufacturing manager stated the following: "Piecework compensation provides an incentive to work fast. Without it, the workers will just goof off and expect a full day's pay. We can't pay straight hourly wages—at least not in this industry." All of the following are true regarding piecework compensation except: a.It is characteristic of a traditional manufacturing philosophy. b.Workers are not compensated for improvements in the process. c.Piecework encourages the workers to make products, regardless of the demand. d.Piecework is pull manufacturing. e.Piecework is push manufacturing

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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1 .Lean Principles

Active Apparel Company manufactures various styles of men's casual wear. Shirts are cut and assembled by a workforce that is paid by piece rate. This means that they are paid according to the amount of work completed during a period of time. To illustrate, if the piece rate is $0.15 per sleeve assembled, and the worker assembles 700 sleeves during the day, then the worker would be paid $105 (700 × $0.15) for the day's work.

The company is considering adopting a lean manufacturing philosophy by organizing work cells around various types of products and employing pull manufacturing. However, no change is expected in the compensation policy. On this point, the manufacturing manager stated the following:

"Piecework compensation provides an incentive to work fast. Without it, the workers will just goof off and expect a full day's pay. We can't pay straight hourly wages—at least not in this industry."

All of the following are true regarding piecework compensation except:

a.It is characteristic of a traditional manufacturing philosophy.

b.Workers are not compensated for improvements in the process.

c.Piecework encourages the workers to make products, regardless of the demand.

d.Piecework is pull manufacturing.

e.Piecework is push manufacturing.

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