Direct Work Cell Labor

The direct labor in the three work cells worked a total of $27,000$ hours last year. Total

payroll for direct labor was $$472,500,$ which includes overtime pay. The average direct

labor rate is $$17\mathrm{.}50$ per hour $($ $$472,50027,000x$ total hours $=$$$17\mathrm{.}50$xper hour$).$ As a rule

of thumb, the team expects to add $40$ percent to direct labor costs to account for

benefits $($health$,$ dental, pension, etc.$).$ The team also expects direct labor rates to

increase $3$ percent a year for the next two years. The team does not expect per$-$hour

production rates to change significantly. The process is well established, and FlexCon

has already captured any learning curve benefits.

Work cell employees are responsible for machine setup, so the team decided not to

include machine setup as a separate cost category.