More Info In addition to wages, direct manufacturing labor-related costs include pension contributions of $0.40 per hour, worker's compensation insurance of $0.10 per hour, employee medical insurance of $0.50 per hour, and Social Security taxes. Assume that as of January 1, 2018, the Social Security tax rates are 7.5% for employers and 7.5% for employees. The cost of employee benefits paid by Clark on its direct manufacturing employees is treated as a direct manufacturing labor cost. Clark has a labor contract that calls for a wage increase to $12 per hour on April 1, 2018. New labor-saving machinery has been installed and will be fully operational by March 1, 2018. Clark expects to have 18,500 frames on hand at December 31, 2017, and it has a policy of carrying an end-of-month inventory of 100% of the following month's sales plus 50% of the second following month's sales. Print Done