Reference no: EM132261733
Costing Economic Issues Assignment -
Directions: Attached to this worksheet is the wage schedule for Sample Company's unionized production workers. Using that wage schedule:
- First: Complete each empty cell of the wage schedule attached.
- Second: Answer the questions below using data from the wage schedule and guidance included in the questions. You may calculate the requested information using a calculator or you may develop spreadsheets to do the calculations. Answers may be hand written as long as they're readable. Partial credit can only be awarded if you show your work, Round to the nearest dollar. Carry percentages to the hundredths place.
1. What is the total, annual, straight time wage budget (not including any overtime) for Sample Company?
2. How many labor hours are worked in a year by the bargaining unit, not including any overtime?
3. What's Sample Company's average straight time rate of pay (ASTR) for the bargaining unit? (ASTR = Annual wages paid total hours worked).
4. Overtime is regularly worked by bargaining unit members on an average, weekly basis as follows:
- Set-up/Clean-up Workers 10% overtime per week, all shifts
- Packaging Operators 10% overtime per week, all shifts
- Machine Operators 10% overtime per week, all shifts
The current contract calls for overtime pay at time and a half (1.5x) over 40 hours/week. The union proposes increasing the overtime rate to 1.75% pay for hours over 40 hours/week. Complete the following chart based on current contract wages to determine the financial impact of the proposed increase in overtime rate of pay. (Chart appears on the next page.)
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A-Shift Weekly OT Hours
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A-Shift Pay Rate
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A-Shift Weekly OT $ at 1.5%
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A-Shift Weekly OT $ at 1.75%
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B-Shift Weekly OT Hours
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B-Shift Pay Rate
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B-Shift Weekly OT $ at 1.5%
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B-Shift Weekly OT $ at 1.75%
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C-Shift Weekly OT Hours
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C-Shift Pay Rate
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C-Shift Weekly OT $ at 1.5%
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C-Shift Weekly OT $ at 1.75%
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Set-up-Clean-up Worker
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24
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$15.20
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Packaging Operator
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40
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$1,068
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Machine Operator
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80
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$2,688
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Totals
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$3,943
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5. What is the total, annual overtime budget (in hours and dollars) at the current wage rates and at the current overtime rate of pay (1.5x)?
Overtime Hours
Overtime Dollars
6. What would be the total, annual overtime budget (hours and dollars) at the current wage rates at the union proposed overtime rate of pay?
Overtime Hours
Overtime Dollars
7. The union's initial wage demand is for an 18% across the board pay increase for a 1-year contract. If this demand is accepted what would Sample Company's new, annual wage budget be (without overtime)?
8. If this demand is accepted, what would be the new average straight time rate of pay (ASTR)?
9. Negotiations conclude with the union accepting wage increases for a 2-year contract as follows:
- YR1 = 1.5% increase
- YR2 = 2.5% increase
What is Sample Company's wage budget (not including overtime) and ASTR for each of the years of the contract?
YR1 Wage Budget and ASTR
YR2 Wage Budget and ASTR
10. In addition to the wage increase indicated above, Union and Management agree on an extra paid Personal Day for Bargaining Unit members. Based on the new wage increases, how much will that extra paid day off cost in Year 1 and in Year 2 of the 2-year contract?
YR1
YR2
11. Health insurance premiums cost $1,000 per month per employee and currently are shared 80% by the company and 20% by the employee. The insurance company has quoted Management an 11% increase in cost of the insurance for YR1 and an 8% increase in cost for YR2. Management has proposed changing the cost sharing ratio to 60% company and 40% employee. Complete the chart to reflect the cost changes:
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Current Total Cost
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Current Company Cost
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Current Employee Cost
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YR1 Total Cost
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YR1 Company Cost
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YR1 Employee Cost
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YR2 Total Cost
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YR2 Company Cost
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YR2 Employee Cost
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$1,800,000
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$799,200
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12. What is the annual savings Management will realize each of the years of the 2 year contract if the Union agrees to the health insurance cost sharing proposal?
13. The final, 2 year contract includes the following:
- Wage increases of 1.5% in YR1 and 23% in YR2.
- Health Insurance Premium Cost Sharing at 60% company and 40% employee.
- 1 additional personal paid day off for each employee per year.
What is the cost of these items to the company prior to the current contract negotiations?
Wage Budget before negotiations =
Health Insurance Premium cost for Company =
Total =
What is the final cost of the contract to the company for YR1?
Wage Budget YR1 =
Health Insurance Premium Cost to Company YR1 =
Cost of Additional Paid Day Off YR1 =
Total =
What is the final cost of the contract to the company for YR2?
Wage Budget YR2 =
Health Insurance Premium Cost to Company YR2 =
Cost of Additional Paid Day Off =
Total =
14. What % <improvement> or what % increase has the Company realized over its prior CBA for these contract provisions?
YR1: (Previous labor costs - YR1 labor costs) Previous labor costs =
YR2: (Previous labor costs - YR2 labor costs) = Previous labor costs =
Notes:
- All employees on the above wage schedule are members of the bargaining unit.
- All employees work full time and full year for the company
- Sample. Company pays shift differentials of 20 (per hour to B-Shift workers and 30C per hour to C-Shift workers.
- The plant operates on a 24/5 operation and is closed on the weekends.
Attachment:- Assignment File.rar