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At XYZ Inc., the hourly wage for semi-skilled workers is $14.00. The annual audit shows that fringe benefits cost 30% of basic wages, and that overhead costs are 60% of wages plus fringe benefits. What is the loaded hourly wage for a semi-skilled worker at XYZ Inc.?
Correct Answer: C
Fringe Benefits = basic wages * 0.3 = $14 * 0.3 = $4.2 Overheads = (Basic wages + Fringe benefits) * 0.6 = (14 + 4.2) * 0.6 = $10.92 Loaded cost = basic wages + fringe benefits + overheads = 14 + 4.2 + 10.92 = $29.12 (The confusion is the statement "overhead costs are 60% of wages plus fringe benefits". Think of it as 60% of (wages plus fringe benefits), not (60% of wages) plus fringe benefits.)