Management Is Considering Adopting a Bonus System to Increase Production

question 131

Multiple Choice

Management is considering adopting a bonus system to increase production. One suggestion is to pay a bonus on the highest 5 percent of production based on past experience. Past records indicate that, on the average, 4,000 units of a small assembly are produced during a week. The distribution of the weekly production is approximately normally distributed with a standard deviation of 60 units. If the bonus is paid on the upper 5 percent of production, the bonus will be paid on how many units or more?

• A) 6255
• B) 5120
• C) 3196
• D) 4099

---

Definitions:

Par Preferred Stock

A type of preferred stock that has a specified face value (par value) which determines the dividend calculation and has priority over common stock in dividend payments and upon liquidation.

Par Common Stock

The nominal or face value assigned to a share of common stock, as declared in the corporate charter, which has little bearing on the market value of the share.

Market Value

The present cost at which a service or asset is available for purchase or sale in the market.

Share-based Compensation

A form of remuneration where employees receive shares of the company's stock as part of their compensation package.