Question

Example: Davidson-Getty Chemicals has 8,000 employees. Each employee earns two weeks to paid vacation per year. Vacation time not taken in the year earned can be carried over to subsequent years. During 2016, the employees had vacation time carryovers as follows: Employees Vacation Weeks Earned but not Taken Total Carryover Weeks 2,500 0 0 2,000 1 2,000 3,500 2 7,000 8,000 9,000 During 2016, compensation average $600 a week per employee. In 2017 Davidson-Getty paid to employees $5,700,000 for the vacation time carried over from 2016.
The salaries and wages expense for employees who took vacations in 2016 was $______________.

Answer 1

Answer:

$4,200,000

Explanation:

Employees  Vacation Weeks Earned but not Taken  Total Carryover Weeks  

2,500                  0                0  

2,000                  1                2,000  

3,500                   2                7,000  

8,000                    9,000

Total weeks/compensations to be taken and paid by/to employees in 2016

=8000 employees * 2 weeks =  16,000 weeks

=16,000 weeks * $600 = $9,600,000

Weeks Taken in 2016

=2500 employees * 2 weeks * $600 = $3,000,000

=2000 employees * 1 week   *  $600 = $1,200,000

=(2500 x 2 weeks x $600) + (2000 x 1 week x $600) =  $4,200,000