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Could you solve this question for me with some explanation? I am completely frozen.
Henry is estimating the labour cost of a new product, PX. 100 units of PX would be produced in the coming period and each unit of PX requires two labour hours, however, 20% of the total labour hours are expected to be idle. Labour would be paid at $10 per hour.
What would be the total labour cost of producing 100 units of PX?
1. 2400
2. 1600
3. 2500
4. 2000Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers. It has answers and explanations.
The need 200 hours for production. However since 20% of the hours that they pay for are idle, only 80% are available for production. Therefore they will need to pay for 200/80% hours.
Thanks sir!
This is question 6.35 of Ma1 Revision Kit. I checked the answer yet I did not understand.
Correct me if I am wrong:
Total Labour cost means Direct Labour cost + Indirect Labour cost. So, in this case, $2000 is Direct Labour Cost( Direct workers Basic pay) and $500 is Indirect Labour cost(Direct workers Idle time hours) and 2500 is total labour cost. From your explanation , now I know why the correct answer is 2500.
But I still don’t know why we divide 200 by 80%?
I have problem in calculation.For every 100 hours that they pay for, 20 hours are idle and therefore they only actually work for 80 hours.
Putting it the other way round, for every 80 hours of work they need to pay for 100 hours.
They need 200 hours of work and therefore they will need to pay for 100/80 x 200 hours.
I cannot comment on the rest of your latest post because I do not have the rest of the question.
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