4. A contract is let for P10,000. It is to be completed in four weeks' time, subject to a penalty of P240 per day if that time is exceeded. At the end of 3 weeks, the work is 60% complete. Cost of labor was initially estimated at P4,000 when working 40 hours per week. If overtime labor must be compensated at double time and work is 8 hours per day straight time, on the revised work schedule: a. Would it be cheaper to take the penalty or to complete the job by working overtime? Show your computation. b. By what percent would the estimated labor cost be increased by the cheaper plan?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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4. A contract is let for P10,000. It is to be completed in four weeks' time, subject to a penalty of P240 per
day if that time is exceeded. At the end of 3 weeks, the work is 60% complete. Cost of labor was initially
estimated at P4,000 when working 40 hours per week. If overtime labor must be compensated at double
time and work is 8 hours per day straight time, on the revised work schedule:
a. Would it be cheaper to take the penalty or to complete the job by working overtime? Show your
computation.
b. By what percent would the estimated labor cost be increased by the cheaper plan?
Transcribed Image Text:4. A contract is let for P10,000. It is to be completed in four weeks' time, subject to a penalty of P240 per day if that time is exceeded. At the end of 3 weeks, the work is 60% complete. Cost of labor was initially estimated at P4,000 when working 40 hours per week. If overtime labor must be compensated at double time and work is 8 hours per day straight time, on the revised work schedule: a. Would it be cheaper to take the penalty or to complete the job by working overtime? Show your computation. b. By what percent would the estimated labor cost be increased by the cheaper plan?
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