Scott Is a Manager at a Pool Cleaning Business

question 81

Essay

Scott is a manager at a pool cleaning business.He has hired 10 workers to clean pools for him and is considering what type of payment scheme he should set up for his workers.He can pay each of his workers $10 per hour to clean pools, or he can pay his workers $20 for each pool a worker cleans.(It takes 2 hours, on average, for an employee to clean a pool thoroughly.)If Scott wants to maximize the number of pools his workers clean in one day, which payment scheme should he use? Explain.

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Definitions:

Raw Materials

The fundamental components used to create or produce goods.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, depreciation, and maintenance of equipment.

Work in Process

Inventory consisting of all materials, labor, and overhead expenses associated with products that are currently being manufactured but are not yet finished.

Cost of Goods Manufactured

The total production cost of goods completed during a specific period.