Sam is the superintendent for the new dorm project your company is building on campus. He really doesn't care for Fred the foreman for the steel crection crew, which is set to start setting steel in 3 weeks. Sam has been angling for a while now to work the steel crew overtime and get them off the job faster. He has a point, if the crew works a straight 40 hrs (8 hrs/day for 5 days/wk) then they will need 6 weeks to set the steel frame. If they work 4 hrs overtime each day (12 hrs/day for 5 days/wk), then they will only need 4 weeks onsite. It is your responsibility as the new assistant project manager to settle the issue. You know there will be an increase in labor cost, but that will be offset by a savings on the crane rental. The crane rents for $8,000 per week. Now you need to know the increase in labor costs. The entire crew consists of 10 workers that are all paid the same $27/hr base wage. Overtime is paid as time and a half for hours over 40. Item Base Wage $27 per hour Social Security Tax 7.65 percent of gross earnings Unemployment compensation tax 4 percent of gross earnings Workers compensation insurance $26.5 per $100 of base wages Public liability/property damage insurance S6.25 per $100 of base wages Fringe benefts $4.00 per hour Calculate the labor costs for each scenario and the total increase in labor cost. 8 hrs per day 12 hrs per day Average Hourly Wage ($/hr) Social Security ($/hr) Unemployment ($/hr) Workers Comp. ($/hr) Public Liability Ins. ($/hr) Fringe Benefits ($/hr) Average Hourly Cost ($/hr) Total Project Labor Cost Increase in Labor Cost
Sam is the superintendent for the new dorm project your company is building on campus. He really doesn't care for Fred the foreman for the steel crection crew, which is set to start setting steel in 3 weeks. Sam has been angling for a while now to work the steel crew overtime and get them off the job faster. He has a point, if the crew works a straight 40 hrs (8 hrs/day for 5 days/wk) then they will need 6 weeks to set the steel frame. If they work 4 hrs overtime each day (12 hrs/day for 5 days/wk), then they will only need 4 weeks onsite. It is your responsibility as the new assistant project manager to settle the issue. You know there will be an increase in labor cost, but that will be offset by a savings on the crane rental. The crane rents for $8,000 per week. Now you need to know the increase in labor costs. The entire crew consists of 10 workers that are all paid the same $27/hr base wage. Overtime is paid as time and a half for hours over 40. Item Base Wage $27 per hour Social Security Tax 7.65 percent of gross earnings Unemployment compensation tax 4 percent of gross earnings Workers compensation insurance $26.5 per $100 of base wages Public liability/property damage insurance S6.25 per $100 of base wages Fringe benefts $4.00 per hour Calculate the labor costs for each scenario and the total increase in labor cost. 8 hrs per day 12 hrs per day Average Hourly Wage ($/hr) Social Security ($/hr) Unemployment ($/hr) Workers Comp. ($/hr) Public Liability Ins. ($/hr) Fringe Benefits ($/hr) Average Hourly Cost ($/hr) Total Project Labor Cost Increase in Labor Cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
Transcribed Image Text:Sam is the superintendent for the new dorm project your company is building on campus. He really
doesn't care for Fred the foreman for the steel erection crew, which is set to start setting steel in 3
weeks. Sam has been angling for a while now to work the steel crew overtime and get them off the
job faster. He has a point, if the crew works a straight 40 hrs (8 hrs/day for 5 days/wk) then they
will need 6 weeks to set the steel frame. If they work 4 hrs overtime each day (12 hrs/day for 5
days/wk), then they will only need 4 weeks onsite.
It is your responsibility as the new assistant project manager to settle the issue. You know there will
be an increase in labor cost, but that will be offset by a savings on the crane rental. The crane rents
for $8,000 per week. Now you need to know the increase in labor costs. The entire crew consists of
10 workers that are all paid the same $27/hr base wage. Overtime is paid as time and a half for
hours over 40.
Item
Base Wage
$27 per hour
Social Security Tax
7.65 percent of gross earnings
Unemployment compensation tax
4 percent of gross earnings
Workers compensation insurance
$26.5 per $100o of base wages
Public liability/property damage insurance $6.25 per $100 of base wages
Fringe benefts
$4.00 per hour
Calculate the labor costs for each scenario and the total increase in labor cost.
8 hrs per day
12 hrs per day
Average Hourly Wage ($/hr)
Social Security (S/hr)
Unemployment ($/hr)
Workers Comp. ($/hr)
Public Liability Ins. ($/hr)
Fringe Benefits ($/hr)
Average Hourly Cost ($/hr)
Total Project Labor Cost
Increase in Labor Cost
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