In an effort to keep low-wage workers' salaries commensurate with the cost of living, a number of states have amended their constitutions to allow the minimum wage to be adjusted with inflation.
You are the accountant for a company that owns a chain of 16 fast food restaurants in a state which adjusts the minimum wage for inflation. Each restaurant employs 55 workers, each averaging 20 hours per week at the current federal minimum wage, $7.25 per hour.
(d)
How much in "additional wages" will the company have to pay out next year at the adjusted rate (in $)? (Round your answer to the nearest dollar.)

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Anthougoid Anthougoid · Answer 1

The "additional wages" that the company will have to pay out next year at the inflation-adjusted rate of 7.5% (in $) is $494,208.

The inflation-adjusted pay rate is the rate after adjusting for inflation.

The number of fast-food restaurants = 16

The number of workers per restaurant = 55

Average weekly hours per worker = 20 hours

The number of weeks per year = 52

The current federal minimum wage per hour = $7.25

The total hours worked by the workers = 915,200 hours (16 x 55 x 20 x 52)

Total current wages = $6,635,200 (915,200 x $7.25)

Inflation rate = 7.5%

Inflation-adjusted wage rate = $7.79 ($7.25 x 1.075)

Total wages for next year = $7,129,408 ($7.79 x 915,200)

Additional wages next year = $494,208 ($7,129,408 - $6,635,200)

Thus, the "additional wages" that the company will have to pay out next year at the inflation-adjusted rate of 7.5% (in $) is $494,208.

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