Problem:

If a company pays a production worker a base wage of $22,000 and a piecework incentive of $1 per pair, if a production worker's annual productivity is 5,000 pairs per year, and if a plant's reject rate averages 5%.

Required:

The average annual compensation of production workers would be

i) None of the above.
ii) $26,850.
iii) $21,150.
iv) $27,000.
v) $26,750 (because workers do not receive a piecework incentive on pair rejected due to defects). Solve the problem and show all work.