2. List of formulas:

Undertime = workforce level - forecasted demand Utilized time = workforce level undertime

Kyle wants to develop a staffing plan (also known as S&OP) using the level strategy. Each worker on the payroll costs $2,000 in regular-time wages per month. Each worker puts in 300 hours of regular time per period and can work as many as an additional 200 hours of overtime. The overtime pay rate is $16 per hour. Undertime is paid at the same rate as regular time. In accordance with the labor contract in force, the company does not use subcontracting. Kyle can hire and train a new employee for $3,000 and lay off one for $500. At present, 30 employees are on the payroll. Vacations, subcontracting, backorders, and stockouts are not options. He wants to use the level staffing plan that relies just on overtime and the minimum amount of undertime possible. Use the spreadsheet approach. Round to the nearest whole number. Answer the following questions.

Question:

What is the total overtime cost in Period 2?

A. 130,000

B. 150,446

C. 192,000