Estimates for direct labor and labor-related costs

Reference no: EM13784928

Pan-Am Manufacturing Company prepares cost estimates for projects on which it will bid. In order to anticipate the labor cost to be included in a request to bid on a contract for 1,200,000 units that will be delivered to the customer at the rate of 100,000 units per month, the company has compiled the following data related to labor:

a. The first 100,000 units will require 5 hours per unit.

b. The second 100,000 units will require less labor due to the skills learned on the first 100,000 units finished. It is expected that labor time will be reduced by 10% if an incentive bonus of one-half of the labor savings is paid to the employees.

c. For the remaining 1,000,000 units, it is expected that the labor time will be reduced 20% from the original estimate (the first 100,000 units) if the same incentive bonus (1/2 of the savings) is paid to the employees.

d. Overtime premiums are to be excluded when savings are computed. The contract will require 2,250 employees at a base rate of $20.00 per hour, with time-and-a-half for overtime. The plant operates on a 5-day, 40-hour-per-week basis. Employees are paid for a two-week vacation in August and for eight holidays. The scheduled production for the 50-week work year shows:

January-June: 26 weeks with 4 holidays

July-December: 24 weeks with 4 holidays

Required:

Prepare cost estimates for direct labor and labor-related costs for the contract, showing the following:

1. Wages paid at the regular rate.

2. Overtime premium payments. (Don't forget holidays in computing regular hours available.)

3. Incentive bonus payments.

4. Vacation and holiday pay.

5. Employer's payroll taxes (13% of total wages, assuming that no employee has exceeded the wage bases for FICA and the unemployment insurance taxes).

Reference no: EM13784928

Questions Cloud

Write a research paper about immigration in america : Write a research paper about immigration in America.

Examine how the system balanced security and usability : Examine how this system balanced security and usability, and explain the challenges of incorporating system security and system usability into a design.

Explain the main sources of power available to managers : Explain the main sources of power available to managers, giving examples of both personal and institutional forms of each.

What are the optimal annual inventory holding costs : A cotton fabric manufacturer uses one line to make 10 different colors of fabric. The production rate at this line is 100 yards per hour. Each yard of fabric costs $5 regardless of color and the annual inventory holding cost rate for these fabrics is..

Estimates for direct labor and labor-related costs : Prepare cost estimates for direct labor and labor-related costs for the contract, showing the following:

The banking system and the money multiplier : What is the maximum amount of loans it can make and List the items on the bank's balance sheet after it has made these loans (but before any checks on the proceeds of the loans have cleared). By how much has the money supply changed?

Howdoes p&g use positioning to differentiate the brands in a : Howdoes P&G use positioning to differentiate the brands in a particularproduct category?

Professional development throughout your career : This course provided you an overview of the discipline of psychology, including expectations for the psychology major, career options for students completing a bachelor's degree in psychology, and career options for students who pursue a graduate ..

Assignment on utility elasticity and demand : Utility Elasticity and Demand.

User Account

All Pages