Question

The Halow Harp and chime Company is negotiating a new labor contract. Among other things, the union is demanding that the company pay its workers weekly instead of twice a month. The payroll currently is Rs. 260,000 per payday, the accrued wages average Rs. 130,000. What is the annual cost of the union’s demand if the company’s opportunity cost of funds is 9 percent?

Answer 1

The annual cost of the union's demand for weekly pay can be calculated using the payroll and accrued wages, along with the number of paydays in a year.

Step-by-step explanation:

To calculate the annual cost of the union's demand, we need to determine the number of paydays in a year. Currently, the company pays its workers twice a month, so there are 24 paydays in a year (12 months x 2).

The payroll per payday is Rs. 260,000, and the accrued wages average Rs. 130,000. To calculate the annual cost, we need to find the difference between the payroll and the accrued wages and multiply it by the number of paydays in a year:

Annual Cost = (Payroll - Accrued Wages) x Number of Paydays

Annual Cost =( Rs. 260,000 - Rs. 130,000) x 24

Annual Cost = Rs. 2,640,000