Bestway Cement Company uses an organizational incentive plan for its entire manufacturing facility. For the year 20B, 755 employees were eligible, and each participated equally.

The plan provides for a gainsharing pool totaling 50% of the value of wages said. The saving is computed by determining the prior years productivity ratio: standard hours for work done divided by total actual direct and indirect labor hours. This ratio is rounded to six decimal places and is then divided into the standard hours for the work done during the current year. The result is compared to current year actual direct and indirect labor hours.

20B 20A

Standard hours for work done 558,510 643,823

Total actual direct and indirect labor hours 1,284,983 1,525,324

In 20B the average hourly pay plus fringe benefits was $14.70.