Reference no: EM131795690

1) Labor Cost problem:

1 shift per day (10 hours)

4-day workweek

5 holidays

10 days of vacation

base pay= $15.00/hour

Fringe = 38% of base wage

30 minute lunch (not paid); two 15-minute breaks (not paid)

1a) What is the effective average cost per hour per worker at 100% productivity?

a) $21.96 b) $20.68 c) $23.74 d) None of the above

1b) Assume current productivity is 7.5 %. Scenario 1: calculate the labor cost for the DC at this level of productivity. Assume 300,000 hours of work required for the year. Scenario 2: Now assume that each worker will work 2 additional hours for each day available for work (overtime) for 1.5 times the base rate per hour for each overtime hour. This overtime will increase worker productivity to 86%. How much will the DC save (lose) in total labor cost for implementing Scenario 2 versus Scenario 1?

a) $557,782.20 b) $606,096.00 c) $593,867.80 d) None of the above.