Compensation of employees includes both direct compensation through wages, and i
ID: 435323 • Letter: C
Question
Compensation of employees includes both direct compensation through wages, and indirect through benefits. In this assignment, you will calculate the total cost of compensation for your firm in its starting situation, and also calculate the impact of changes in wages and benefits.
1. Calculate the total compensation for each employee level, then calculate the hourly wage and hourly compensation. Assume 520 hours in the quarter.
Job Level
Quarterly Wage
Benefits @20%
Total Compensation
Hourly Wage
Hourly Compensation
5
$18,000
4
$14,000
3
$12,000
2
$10,000
1
$8,000
2. You would like to give a 5% raise to all employees. Calculate the dollar amount of the raise for each level. Then, given the number of employees at each level, calculate the total cost of the raise—this is the amount that would be charged against the budget. Finally, calculate the total payroll amount including the raise.
Job Level
Quarterly Wage
5% Raise
# Emp.
Cost of Raise
Payroll w/Raise
5
$18,000
20
4
$14,000
25
3
$12,000
50
2
$10,000
60
1
$8,000
500
TOTAL:
3. Based on your calculations in question 2 and 100,000 units of production, what is the impact of an across-the-board 5% raise on unit cost?
4. Assume a 3% increase in benefits along with the raise in question 2. What is the cost of the benefits increase? What is its impact on unit cost?
5. What other factors, besides a raise or benefit increase, might affect unit costs? How are those factors related to changes in compensation?
Job Level
Quarterly Wage
Benefits @20%
Total Compensation
Hourly Wage
Hourly Compensation
5
$18,000
4
$14,000
3
$12,000
2
$10,000
1
$8,000
Explanation / Answer
1.
2.
3. Total raise = 295500
Cost of raise per unit = 295500 /100000 = 2.955
4. Cost of 3% benefits = 295500 x3 /5 = 177300
Additional impact on the unit cost = 177300 /100000 = 1.773
5. Other factors that impact a unit cost are
(a) Material cost
(b) Overhead cost like rents, depreciation, electiricity, water, air conditioning, utilities, maintenance etc.
( c) Cost of advertising, training, promotion, sales efforts etc.
(d) Other miscellaneous expenses
Job Level Quarterly wage Benefits @20% Total compensation Hourly wage Hourly compensation 5 18000 3600 21600 34.61 41.53 4 14000 2800 16800 26.92 32.3 3 12000 2400 14400 23.07 27.69 2 10000 2000 12000 19.23 23.07 1 8000 1600 9600 15.38 18.46Related Questions
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