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– A job requires 2,400 actual labour hours to complete.
– idle time is anticipated to be 20% of the total time required
– Wage is $10 per hour
– What is budgeted labour cost for the job, including cost of idle time?Q: why do you divide 2400 by 80% rather than finding the 120% of 2400 (1.2×2400 = 2880 hours)?
For every 100 hours that they pay for, 20 hours will be idle and therefore only 80 hours will be worked.
Therefore for every 80 hours of work they need to pay for 100 hours.
So for 2,400 hours of work they will need to pay for 2,400 x 100/80 = 3,000 hours (of which 20%, i.e. 600 will be idle, leaving 2,400 for work)
Could you also think of it as the 2400 hours being = to 80%
therefore, 1% is 2400/80 = 30hours and the 20% idle time will be 30×20 = 600 hours,
therefore, total hours worked is 2400 + 600 = 3000hours?
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