Section
Calculate the direct labour cost for the Hanson Restaurant
Direct Labour Budget
Hanson production requirements are as follows
April
May
June
Units to be produced
6000
7000
8000
Each unit requires two labour hours to produce and workers are paid $16.00 per hour
Required:
_ A. Assuming a completely flexible labour force, prepare the company’s direct labour budget or the quarter.
B. Refer to the original data, assume the company has permanent employees who are guaranteed to be paid for at least 12500 hours per month. If production requires less than 12500 hours, they will be paid for 12500 hours according to the contract. Any amount of work above 12500 hours will be paid at 1.5 times their normal hourly rate. (10 marks)
Section 2
Sam of Sam’s Smoothie Shop wants to know her labor cost percentage for the year that just ended, 2020. First, she adds up her labor costs for 2020. She looks at her accounting and payroll records and discovers that her total labor costs includes $100k in salaries and wages, $20k in overtime pay, $20k in paid time off, $40k in payroll taxes, and $20k in employee benefits, for a total of $200k in labor costs for 2020.
Then, Sam generates a sales report for 2020 from her POS and sees that her smoothie shop generated $715k in total revenue that year.
QUESTION: Calculate the Labor Cost Percentage.
