Chapter 3, Problem 1P

Payroll computation with incentive bonus

Fifteen workers are assigned to a group project. The production standard calls for 500 units to be completed each hour to meet a customer’s set deadline for the products. If the required units can be delivered before the target date on the order, the customer will pay a substantial premium for early delivery. The company, wishing to encourage the workers to produce beyond the established standard, has offered an excess-production bonus that will be added to each project employee’s pay. The bonus is to be computed as follows:

1. a. $\frac{\text{Grou}{\text{p}}^{\prime }\text{s excess production over standard }\times \text{ 50\%}}{\text{Standard units for week}}=\text{bonus percentage}$
2. b. Individual’s hourly wage rate × bonus percentage = hourly bonus rate
3. c. Hourly wage rate + hourly bonus rate = new hourly rate for week
4. d. Total hours worked × new hourly rate = earnings for week

The production record for the week shows the following:

Required:

1. 1. Determine the hourly bonus rate. (Round the bonus percentage to four decimal places and the bonus rate to the nearest whole cent.)
2. 2. What are the total wages of L. Weitmarschen, who worked 40 hours at a base rate of $15 per hour?
3. 3. What are the total wages of R. Emerson, who worked 35 hours at a base rate of $20 per hour?