2.42 We are interested in finding the estimated cost for the job description of
ID: 412729 • Letter: 2
Question
2.42 We are interested in finding the estimated cost for the job description of superintendent.The contractor employs key people throughout the year, but hires and fires nonmanagement labor depending on business activity The preplanned year consists of 52 40-hour weeks, and overtime at a wage scale of "time- and-half" is seasonal for 12 weeks consisting of Saturday work of 8 hours. The contractor pays for 4 holidays and 10 days of vacation at regular wage. Five days of sick leave are paid. Expected nonchargeable hours are 5%. A subsidy for performance is 10%; it is preplanned but may not be paid. Nonhourly costs include FICA and Meditax taxes at the current federal rate, and un- employment insurance of 2% and workmen's compensation at 3% of regular wages up to $15,000, additional accident insurance of $500, medical plan of $2400 annually, and Christmas gift of $100. The hourly wage is $30. Find the effective gross hourly wage. What is the per- centage increase due to "fringe benefits" over the wage rate?Explanation / Answer
Normal Wages for a 40-hour week at $30/hour for 52 weeks = 40x30x52 = $ 62,400.00
Time and a half for overtime = 30 + (30/2) = $45
Over time wages for 8 hours on Saturday for 12 weeks = 12 x 8 x 45 = $ 4320.00
Total Gross for normal & overtime wages = 62,400 + 4,320 = $ 66,720.00
Time-Off Benefits (Included in the wages)
Per-day work hour time = 40-hour week /5 = 8 hours per day
Vacation for 10 days = hours for 10-day x hourly wage = 10 x 8 x 30 = $2,400.00
Five days sick leave = 5 x 8x 30 = $1600.00
Holidays - 4 days = 4 x 8 x 30 = $960.00
Non-rechargeable hours 5% = $ 62,400.00*5% = $3,120.00
Time-Off Benefits (Included in the wages) = 2,400 + 1600 +960 +3120
Time-Off Benefits (Included in the wages) = $ 8080
Subsidy performance benefits (10%) which may not be paid = $ 62,400.00 *10%
Subsidy performance Benefits (Included in the wages) = $6,240.00
Fringe Benefits
Unemployment Insurance 2% = $ 62,400.00 *0.02 = $1,248.00
Workmen Compensation 3% = $ 62,400.00 *0.03 = $1,872.00 (up to $ 15,000)
Accidental Insurance = $500.00
Medical Plan = $2,400.00
Christmas Gift = $100.00
Total Fringe Benefits = 1248+1872+500+2400+100 = $ 6120.00
Effective Hourly wage rate = Total gross wage – time off benefits – Subsidy performance benefits
Effective Hourly wage rate = $ 66,720.00 – 8080 – 6240
Effective Hourly wage rate = $52,400
Net pay = Total gross wage + Total Fringe Benefits = $ 66,720.00 + $ 6120.00 = $72,840.00
% increase due to fringe benefits over wage rate = Fringe Benefits/Total gross rate = 6120/66720
Increase due to fringe benefits over wage rate = 9.17 %
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