# Payroll costs custom essay.

Labor is generally always one of the largest budget items in any operation. Managers who learn how to accurately plan for and determine their labor costs will be much more effective in their positions than those who are not accurate. Information technology plays a significant role in planning for issues such as labor costs and, in many cases, will do the work automatically for you. However, as a manager, you will need to be very conscious of how these costs are arrived at so that you can determine if the answer your system is giving you is correct.
When figuring labor costs, several factors come into play such as hourly rates for employees, shifts, hours of operation for the facility, benefits costs, paid vacation time off, etc. Most often the easiest way to figure the number of hours worked in a year is to multiply 40 hours per week X 52 weeks a year or 2,080 hours. Overtime is normally figured at 1.5 X the employee’s hourly rate. For example, an employee making \$16 an hour would make \$24 an hour for every hour of
overtime worked (\$16 X 1.5= \$24). When you figure out hours of operation for a facility, you need to decide if your employees will work 1, 2, 3, or 4 shifts. Weekend work is always a consideration. If you work 2 shifts during the week and 1 shift on Saturday, then you would likely switch the crews so that each crew works every other Saturday. For figuring labor, you must be sure not to show too much time for Saturday work in this scenario since only half your employees will be working on Saturday. Using what you have learned from the text and given the following information, answer the questions that follow:
You are the warehouse manager for XYZ Company. You have been asked to start up a new warehouse and you need to determine what your annual labor budget will be for the first year. The new warehouse will operate 6 days a week. Monday
through Friday the hours of operation will be 6 a.m. to 10 p.m. (16 hours a day) and Saturday hours will be 8 a.m. to 4 p.m.
(8 hours).
You have determined that you need 2 operators, a shift supervisor, and an administrative assistant on dayshift Monday
through Friday. You will need 2 operators, a shift supervisor, and NO administrative assistant on night shifts Monday
through Friday. On Saturday, you will only need 2 operators and 1 shift supervisor. No administrative assistant will be
needed on Saturdays. You have also determined that you will need 2 delivery truck drivers, one for each shift, Monday
through Friday, and 1 driver each Saturday for the normal 8 hour shift.
Wages for similar production employees in the local area are as follows:
Warehouse employees: \$16.00 per hour which includes benefits costs