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Analysis of a Salary Scenario

An internal study at Mimeo Corporation; a manufacturer of low end photocopiers, revealed that each of its workers assembles 3 photocopiers per hour and is paid $3 dollars for each assembled copier. Although the company does not have the resources needed to supervise the workers, a full time inspector verifies the quality of each unit produced before a worker is paid for his or her output. You have been asked by your supervisor to evaluate a new proposal designed to cut costs. Under the plan, workers would be paid a fixed wage of $8 per hour. Would you favor the plan? Explain.

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Currently employees average income per hour is $9 (calculated $3 x 3 photocopiers). So initially it would appear that the firm is saving money my switching to a flat salary of ...

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Fixed Salary versus Variable Salary

Analysis of two possible salary scenarios. Quantitative versus qualitative factors.