Answer: The total wage expense for the four months is $250,000.
To determine the total wage expense, you'll first need to determine how many workers you'll need each month to meet the demand after accounting for the beginning inventory. Once you know how many workers are required, you can then determine the total wage expense.
Month 1
Beginning Inventory: 900
Demand: 3000
Number of units needed to be produced = Demand - Beginning Inventory
= 3000 - 900
= 2100 units
Number of workers needed for Month 1 = Units needed / Units produced by 1 worker
= 2100 units / 100 units/worker
= 21 workers
Month 2
Ending Inventory from Month 1 (will be the beginning inventory for Month 2): 900 + (units produced in Month 1) - (Demand in Month 1)
= 900 + 2100 - 3000
= 0 (because all produced units were used to meet the demand)
Demand for Month 2: 3525
Number of units needed to be produced = 3525 units (since there's no beginning inventory)
Number of workers needed for Month 2 = 3525 units / 100 units/worker
= 35.25 (You can't have a fraction of a worker, so you would need 36 workers to meet the demand.)
Month 3
Ending Inventory from Month 2: 0 + (units produced in Month 2) - (Demand in Month 2)
= 0 + 3625 - 3525
= 100 units
Demand for Month 3: 3375
Number of units needed to be produced = 3375 - 100
= 3275 units
Number of workers needed for Month 3 = 3275 units / 100 units/worker
= 32.75 (Again, you would need 33 workers to meet the demand.)
Month 4
Ending Inventory from Month 3: 100 + (units produced in Month 3) - (Demand in Month 3)
= 100 + 3300 - 3375
= 25 units
Demand for Month 4: 3505
Number of units needed to be produced = 3505 - 25
= 3480 units
Number of workers needed for Month 4 = 3480 units / 100 units/worker
= 34.8 (You would need 35 workers to meet the demand.)
Total wage expense = (Number of workers for Month 1 + Number of workers for Month 2 + Number of workers for Month 3 + Number of workers for Month 4) x $2000
= (21 + 36 + 33 + 35) x $2000
= 125 x $2000
= $250,000