Answer:
Explanation:
Given that ;
The Acme Company lost 650 hours due to accidents on the job in the first quarter of the year
The average hourly wage of the employees who contributed to the lost hours was $15.00 . i.e the direct labor cost = $15.00
The company benefits add 25% to the wages. = 0.25
The loaded labor cost = $15.00/hr × 0.25 = $3.75/hour
If we add the additional cost of benefit, then we have the loaded labor cost to be = $15.00/hour + $3.75/hour
= $18.75 / hour
However, the direct labor costs that the workers continued to receive without working. for the first quarter of the year by using the cost-of-lost-hours formula is :
= 650 hours × $15.00 / hours
= $9750
The hidden costs can be estimated from the Acme company's contributions to the employee. Given that the company benefits add 25% to the wage of the employee, therefore, this wage must be incorporated in order to find out the total wage cost for the lost work hours in the Acme company.
As a result of the company benefits, the fully loaded labor cost is 650 hours × $18.75 /hour which gives $12187.5.
Consequently, it is pertinent to determine the cost for additional benefits that the workers are receiving even though they are not working, this is achieved by the difference in the $9750 direct cost paid to labor and the benefits amount of $12187.5
i.e
the cost for additional benefits that the workers are receiving even though they are not working = $12187.5 - $9750 = $2437.5
Other ways the hidden cost can be estimated is by take note of the amount paid to the employee on the day the employee had an emergency, amount paid to the rescue team involved. etc