The actual labor cost is $600 over the targeted labor cost.
Given that,
Work done by each person per week = 40 hours
Required labor hours per week = 600 hours
No. of workers in the team = 13
To find,
Actual weekly labor cost = ?
Procedure:
Actual weekly labor cost = No. of workers * no. of hours performed by them
[tex]= 13 * 40[/tex]
[tex]= 520 hours[/tex]
Given that,
[tex]Regular rate = $ 15.00 per hour[/tex]
[tex]Overtime rate = $ 22.50 per hour[/tex]
Thus,
Actual labor cost = (regular hours worked * regular rate) + (overtime * overtime rate)
[tex]= (520 * 15) + ([600 - 520] * 22.50)[/tex]
[tex]= $ 7,800 + $ 1,800[/tex]
[tex]= $ 9600[/tex]
Targeted Labor cost = $ 9,000 per week
Thus, option C i.e. the actual labor cost is $ 600 over the targeted labor cost.
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