Unit 2: May 2012, Question #1 (D)

No. 1(d) (i): Calculation of the cost of producing 300,000 units of luxury sandwiches and 450,000 units of standard sandwiches under the piece rate system, for Cal’s Fast Food.

No. 1(d) (ii): Calculation of the total number of hours worked during the summer for Cal’s Fast Food.

No. 1(d) (iii): Calculation of the overtime hours worked per week during the summer for Cal’s Fast Food.

No. 1(d) (iv): Calculation of the additional pay for labor over the 8 weeks of summer for Cal’s Fast Food.
Total overtime hours worked is 600 hours per week. The rate of overtime is $2.50 per hour. Therefore the additional pay for labor over the 8 weeks of summer = $600 X $2.50 X 8 weeks = $12,000.
 

No. 1(d) (v): Calculation of the annual wages payable under the proposed system for Cal’s Fast Food:
Proposed number of staff is 12 at a salary of $1,000 per month. Therefore the annual wages payable = 12 workers x $1,000 x 12 months = $144,000.
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Alternatively:
It is proposed that each employee will work 50 weeks at 40 hours and be paid $6 per hour. Therefore annual wages = 12 employees x 50 weeks X 40 hours x $6 = $144,000.

Note: Either method of calculating the annual wages under the new proposed system is acceptable.

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