Cost of Direct Labor

Question One 

A project team member can calculate direct labor cost using the data below:

Hours needed: 150, Hourly rate: $55/hour, and Overhead rate: 35%

Total direct labor cost= Hours need x Hourly rate x Overhead charge = 150 x 55 x 1.35 = $11,137.5

Question Two 

Question Three 

Question Four 

Hours needed: 180

Hourly rate: $75/hour

Overhead rate: 45%

Total direct labor cost= Hours need x Hourly rate x Overhead charge =180 x 75 x 1.45 = $15,080

Note: Direct cost of labor is inclusive of overhead costs which also sum up to Total Direct Costs.

Question Five 

More often top-down budgeting would be preferred as it provides better cost controls. Further, this type of budget draws on historical costs. Unfortunately, these benefits have some cost. One of the major disadvantages is that it results in friction between the managers at all three levels which include top, middle, and lower. This is because it results in a zero-sum game (Pinto, 2010). On the other hand, bottom-up budgeting benefits the project team from being full of details. Further, the costs can be allocated into individual tasks and Work Breakdown Structure. However, the process of preparing this budget is time-consuming as it has to be authorized from top management. In the long-term, this may result in variances in the strategic goals of the project.

References

Pinto, J. K. (2010). Project management: Achieving a competitive advantage (2nd ed.). Upper Saddle River, NJ: Prentice Hall. Pp 252