Payroll computation with incentive bonus Fifteen workers are assigned to a group
ID: 2462140 • Letter: P
Question
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: a. Group’s excess production over standard50% Standard units for week ¼ bonus percentage b. Individual’s hourly wage rate bonus percentage ¼ hourly bonus rate c. Hourly wage rate þ hourly bonus rate ¼ new hourly rate for week d. Total hours worked new hourly rate ¼ earnings for week The average wage rate for the project workers is $15 per hour. The production record for the week shows the following: Hours Worked Production (Units) Monday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 61,040 Tuesday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 60,032 Wednesday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 60,480 Thursday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 65,632 Friday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 57,344 Saturday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 26,000 616 330,528 Required: 1. Determine the hourly bonus rate and the total amount of the bonus for the week. (Round the bonus percentage to five decimal places and the bonus rate to the nearest whole cent.) 2. What are the total wages of B. Moxie, who worked 40 hours at a base rate of $15 per hour? 3. What are the total wages of C. Flood, who worked 35 hours at a base rate of $20 per hour? P3-2
Explanation / Answer
Hourly Bonus Rate
Total Production in the week = 330528 (units)
Total hourly work in the week = 616
Average Production per hour = 330528/616
= 536.57
Standard Production per hour = 500
Excess production per hour in % = ( 536.57-500)/500
= 7.31%
Hourly bonus rate = Hourly Wages Rate * Bonus percentage
= 15*7.31%
= 1.0965
or
= $ 1.10
Total Amount of the bonus for the week.
Total amount of the bonus for the week = Total hour worked * Hourly Bonus rate
= 616*1.10
Total amount of the bonus for the week = $ 677.60
2 .Total Wages of L. Brock
Total Wages of L. Brock = (Base Rate per hour+ Bonus per hour) * hour worked
= (15+1.10) *40
= 16.10*40
Total Wages of L. Brock = $ 644
Answer 3 : Total Wages of R. Gibson
Hourly bonus rate = Hourly wage rate * bonus percentage
= 20*7.31%
Hourly bonus rate = 1.46
Total Wages of R. Gibson = (Base Rate per hour+ Bonus per hour) * hour worked
= (20+1.46) *35
= 21.46*35
Total Wages of R. Gibson = $ 751.1
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