Kellog Industries is a manufacturing company that makes various industrial components out of aluminum. Kellog is located in a large city in the northeastern United States. Various labor disputes have occurred in the city some with acrimonious public debate concerning the honesty of management. During one of Kellog's routine employee meetings Colin Ross a production worker brought up the issue of the cost of a worker as reported in the company's annual report.
The cost was given as $32000 per year. Colin points out that the average wage rate of $12 per hour is at most around $25000 in gross wages. He asks whether the company is adding in overtime because if so the figures are misleading because the employees are not allowed to work overtime.
Required:
Prepare a note explaining to Mr. Ross how Kellog might calculate a cost per employee that is greater than gross wages. Explain in general terms only. Do not use any calculations.

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The Answer of Kellog Industries is a manufacturing company that makes various industrial components out of aluminum. Kellog is located in a large city in the northeastern United States. Various labor disputes have occurred in the city some with acrimonious public debate concerning the honesty of management. During one of Kellog's routine employee meetings Colin Ross a production worker brought up the issue of the cost of a worker as reported in the company's annual report.
The cost was given as $32000 per year. Colin points out that the average wage rate of $12 per hour is at most around $25000 in gross wages. He asks whether the company is adding in overtime because if so the figures are misleading because the employees are not allowed to work overtime.
Required:
Prepare a note explaining to Mr. Ross how Kellog might calculate a cost per employee that is greater than gross wages. Explain in general terms only. Do not use any calculations.

Kellog Industries Is a Manufacturing Company That Makes Various Industrial