A management report identified the following labour usage ratios for a window manufacturer in Richmond, British Columbia: 1.4 hours of labour per window in 2009; 1.25 hours of labour per window in 2010. Management makes the arbitrary decision to set next year's gain-sharing cutoff at 1.325 labour hours per window (the average of the 2010 and 2009 figures). Which of the following gain-sharing plans is management using?

Question

Quizplus · Accepted Answer

The management is using the Improshare plan, which is a gain-sharing plan that sets a standard labour usage rate per unit produced. The cutoff of 1.325 labour hours per window is the standard that the workers must meet or exceed in order to receive a gain-sharing bonus.

A Management Report Identified the Following Labour Usage Ratios for a Window