Idle Time

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    Grace
    Participant
    • Topics: 7
    • Replies: 15

    Dear John Sir,
    Sorry another question again:
    Prodt budgeted 8200 u , each unit needs 6 hs to make. Labour is paid $15 per h. the idle time represents 10% of the total time paid. What is the total budgeted labour cost?
    The given answer in F2 mock exam is 820000. I can’t get it.
    Idle time=paid hours-worked hours right? How do we know the worked times ?


    Avatar of John Moffat
    John Moffat
    Keymaster
    • Topics: 3
    • Replies: 5499

    For every 100 hours paid, 10% are idle – so 10 hours are idle and 90 hours are worked.
    So for every 90 hours worked, they pay for 100 hours.

    The hours budgeted to work are 8,200 x 6 = 49,200

    So the hours budgeted to pay are 49,200 x 100/90.

    So the total budgeted cost is 49200 x 100/90 x $15 = $820,000


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    Grace
    Participant
    • Topics: 7
    • Replies: 15

    got it! Thank you sir !:)


    Avatar of John Moffat
    John Moffat
    Keymaster
    • Topics: 3
    • Replies: 5499

    You are welcome :-)

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