Given the following Year 12 Financial Statement data for a footwear company: Inc

Question

Given the following Year 12 Financial Statement data for a footwear company:
Income Statement Data

Year 12 (in 000s)
Net Revenues from Footwear Sales $ 300,000
Operating Profit (Loss) 70,000
Net Profit (Loss) $ 42,000

Balance Sheet Data



Cash on Hand 10,000
Total Current Assets $ 70,000
Total Assets 270,000
Overdraft Loan Payable 5,000
1-Year Bank Loan Payable 10,000
Current Portion of Long-term Loans 17,000
Total Current Liabilities 48,000
Long-Term Bank Loans Outstanding 90,000

Shareholder Equity: Year 11 Balance Year 12 Change

Common Stock 10,000 0 10,000
Additional Capital 120,000 0 120,000
Retained Earnings 30,000 15,000 45,000
Total Shareholder Equity 160,000 +15,000 175,000

Based on the above figures and the formula for calculating return on average equity found on p. 30 of the Player

Explanation / Answer

If a company pays a production worker a base wage of $21,000 and a piecework incentive of $1 per pair, if a production worker's annual productivity is 4,000 pairs per year, and if a plant's reject rate averages 5%, then the average annual compensation of production workers would be

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