PROBLEM 1Suppose a day has 8 working hours. Standard output is 100 pcs per hour. Standard labor rate is $10 perhour. Differential piece rate: 85% of standard piece rate for below standard output and 120% of standard piece rate for standard and above standard output.Operator A produces 700 pcs for the whole day.Operator B produces 900 pieces for the whole day.Compute salaries of operator A and B for that day.Solution:Standard output of the day 8 x 100 = 800 pcsStandard pcs rate =
= $0.10/pcsAs A is below standard performer,Pcs rate applicable for A = $0.10 x 85% = $0.085 / pc
A’s salary of that day = 700 x $.085 = $ 59.5/day.
As B is above standard performer,Pcs rate applicable for B = $0.10 x 120% = $0.12/pc
B’s salary of that day = 900 x $0.12/pc = $108/day.