WAGE RATE ANALYSIS

Review Exercises 1 through 3 below carefully and answer the questions at the end of each exercise in detail.

Exercise 1

Question requests the Government accept $9.80/hr. Do you agree? 2. With respect to the wage rates, what specific information would you like the wage rate to be broken down into?

Engineering Category	Wage Rate	Hours Projected for Contract
I	$ 6.50	70
II	$ 7.50	110
III	$ 9.00	130
IV	$11.00	30
V	$15.00	10

Exercise 2

Given the following data, develop a pre-negotiation objective of a weighted average wage rate for 8,000 hours of labor.

Category	Wage Rate/Hr.	% of Contractual Effort
Scientist	$25.00	10%
Senior Engineer	$23.00	15%
Engineer Assistant	$14.00	5%
Trainee	$ 7.00	70%

QUESTION:

1. Is the use of a weighted average rate appropriate in this case?

Exercise 2

Given the following data, develop a pre-negotiation objective of a weighted average wage rate for 8,000 hours of labor.

Category	Wage Rate/Hr.	% of Contractual Effort
Scientist	$25.00	10%
Senior Engineer	$23.00	15%
Engineer Assistant	$14.00	5%
Trainee	$ 7.00	70%

QUESTION:

1. Is the use of a weighted average rate appropriate in this case?

Exercise 3

Looking at labor scheduling, a firm proposes the following:

Work Plan	Hr.	Wage Rate
May	2000	$21
June	3000	$22
July	4000	$23
August	5000	$24
September	4000	$25
October	3000	$26
November	2000	$27

QUESTION:

1. Is $24/hr. acceptable to you?

A new plan is negotiated as follows:

Work Plan	Hr.
May	2000
June	7000
July	5000
August	5000
September	2000
October	1000
November	1000

QUESTION:

2. Is $24/hr. acceptable to you now?

The firm's overhead rate is 150% of direct labor cost and G&A is 8% of total cost. The firm proposes a profit of 12%.

QUESTION:

3. Is there a pricing impact for accepting $24/hr.?