A product distribution company has recently adopted a highly comples automated operations management system with an artificial intelligence component that requires highiy skilled wokkers. Company growth is strong and it is expected to increase through the next ten years, requiring it to build additional distribution centers. Initially, there were enough highly qualied job candidates with the necessary experience required to perform the job without requining company imestments in training. As growth continued, the supply of similar job candidates relative to the company's need was low. This labor market reality led the company to establish a skillbased pay system. The company's analysis of the labor market enabled them to project the mix of employees that will be avalable (those who are already fully qualified, needing little training. and those who have the potential to perform well, but who do now have the nequired skills to perform the fobs). The company offers pay that is $23.00 cm an hourty basis to entice the best qualified candidates to accept job offers. Those new hires are productive nghit from the start with litle company training irwestment. The company offers the other new hires starting pay at 10 percent below that rate because of the extensive training needed belore they can perform their jobs. Finalw the compary employs 450 workers of whom 40 percent are paid above the market average and 60 percent are paid below ket average. Over the next year, the company plans to hire 70 additional employees of wisom 20 percent are expected to be paid aoove the market rate and 80 percent are expected to be pad below the market rate. (Round your answers to the nearest bundhedths place.) (a) The hourly pay rate for highly skilled workers is S (b) The hourly pay rate for workers who are building skils through training is s Based on 160 monthly work hours, the total cost of monthly wages for: (Round your answers to the nearest hundredihs placed (a) current highly skilled workers is 5 (b) current workers who are building skills through twaining is Based on 160 monkly work hours, the sotal cost of monthly wages fon: (Round your answers to the nearest hundredths place.) (a) the newly hired workers (expected to be hired over the pekt year) who ate highly skilied will bet (B) the newly hired workers workers (expected to be hired ovap thin nexi yeat) who are building skils through training wil bes
(a) The hourly pay rate for highly skilled workers is $23.00.
(b) The hourly pay rate for workers who are building skills through training is $20.70 (10% below the market average of $23.00).
The total cost of monthly wages for current highly skilled workers is:
450 workers * 40% = 180 workers at $23.00 per hour
Total cost = 180 * $23.00 * 160 monthly work hours = $662,400
The total cost of monthly wages for current workers who are building skills through training is:
450 workers * 60% = 270 workers at $20.70 per hour
Total cost = 270 * $20.70 * 160 monthly work hours = $893,760
The newly hired workers (expected to be hired over the next year) who are highly skilled will be:
70 workers * 20% = 14 workers
Total cost = 14 * $23.00 * 160 monthly work hours = $63,840
The newly hired workers (expected to be hired over the next year) who are building skills through training will be:
70 workers * 80% = 56 workers
Total cost = 56 * $20.70 * 160 monthly work hours = $184,896
(a) The hourly pay rate for highly skilled workers is $23.00.
(b) The hourly pay rate for workers who are building skills through training is $20.70 (10% below the market rate of $23.00).
To calculate the total cost of monthly wages for the current highly skilled workers, we use the formula:
Total cost = Hourly pay rate * Number of workers * Monthly work hours.
Let's assume there are N highly skilled workers at the moment, where N is 450 * 40% = 180 workers.
So, the total cost of monthly wages for the current highly skilled workers is:
(a) Total cost = $23.00 * 180 * 160 = $662,400.
For the workers who are building skills through training, they are currently paid 10% below the market rate, which is $23.00 * 90% = $20.70.
Let's assume there are M workers who are building skills through training, where M is 450 * 60% = 270 workers.
So, the total cost of monthly wages for the current workers who are building skills through training is:
(b) Total cost = $20.70 * 270 * 160 = $881,760.
Now, let's calculate the total cost of monthly wages for the newly hired workers (expected to be hired over the next year).
For the newly hired workers who are highly skilled and expected to be paid above the market rate, the estimated number of workers is 70 * 20% = 14 workers.
The total cost of monthly wages for the newly hired highly skilled workers is:
(a) Total cost = $23.00 * 14 * 160 = $51,520.
For the newly hired workers who are building skills through training and expected to be paid below the market rate, the estimated number of workers is 70 * 80% = 56 workers.
The total cost of monthly wages for the newly hired workers building skills through training is:
(b) Total cost = $20.70 * 56 * 160 = $186,816.
Therefore, the answers are:
(a) The total cost of monthly wages for the current highly skilled workers is $662,400.
(b) The total cost of monthly wages for the current workers building skills through training is $881,760.
(a) The total cost of monthly wages for the newly hired highly skilled workers is $51,520.
(b) The total cost of monthly wages for the newly hired workers building skills through training is $186,816.