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.” a. How would you respond to the manufacturing manager’s comments?

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.” a. How would you respond to the manufacturing manager’s comments?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter8: Standard Costs And Variances

Section: Chapter Questions

Problem 2EB: Salley is developing material and labor standards for her company. She finds that it costs $0.55 per...

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