Jeremy Otter is paid basic salary of $10 an hour and overtime at time-and-a-quarter. Jeremy鈥檚 basic hours are 9 to 6 with an hour for lunch. Yesterday, Jeremy worked from 8 to 7. How much did Jeremy earn yesterday? *

In future please ask this sort of question in the Ask the Tutor Forum and not as a comment on a lecture.

He worked 11 hours and so his basic pay will be 11 X $10 = $110. His basic hours are 9 hours and so there were 2 hours of overtime. Therefore he will receive an overtime premium of 2 x 1/4 x 10 = $5. So his total pay is $115.

Sir, for production activity , why not use actual hours over budgeted hours – that is what actually happened. We should measure that performance. Why expected hours over budgeted hours.

According to your example, expected hours (26,000hrs) was needed to produce 65,000 units as per budgeted standard hour rate, which was being compared to 22,000hrs actually taken.

If you compare expected hours to budgeted hours via ratio, the latter which was 20,000hrs, was budgeted to produce 50,000 units, not 65,000 units.

So how can we compare the both via ratio ? They dont seem to have a common factor. Budgeted is for 50,000 units (20,000hrs), expected is to produce for 65,000 units (26,000 hrs).

Elaboration appreciated to the understanding of the Production volume Ratio (Activity Ratio).

Although I have written the formula in the standard ACCA way (as you will see in the ACCA technical article), it is the same as simply dividing actual production (65,000 units) by the budgeted production (50,000 units), which is a ratio of 1.3.

How did we manage to produce more units than expected? By having more hours available than budgeted (the capacity ratio) and by working faster than expected (the efficiency ratio). Multiplying these two ratios together gives the production volume ratio.

Could you please explain the rationale behind associating overt timer premium connected to over work aside from customer request, and bonuses, to indirect costs ?

I did understand regarding sick leave and idle time – as they are no long doing direct labour over the products that are being produced. So due to their absence in the production of those items, they are thus now considered indirect expense.

Second, for labour turnover, why dont we divide the replacement by 100 (original employees) or 70 (employees remaining) and then multiply by a 100. Why find the average. What was the rationale behind that ?

Hallo,I have a question on labour turnover ratio. What do we look there…the number itself of employees left the organisation or the number of worker that joined after some had left for avoidable reasons.I am now confused there, may you kindly sir.

Suppose a company started the year with 10 employees. During the year 3 left. At the end of the year they had 12 employees. That means that they must have employed 5 new people. Of these 5, 3 were leavers who were replaced (the other 2 were new people and are not relevant for the formula).

Another. Suppose they started the year with 10 employees. During the year 3 left. At the end of the year they had 8 employees. That means they employed 1 new person and that 1 person replaced 1 of the leavers.

The formulae given the exam are printed at the beginning of our free lecture notes. However these do not include the formulae for labour – these you have to learn.

It is essential that you buy a Revision Kit from one of the ACCA approved publishers (BPP and Kaplan). They are full of exam-standard question to practice and practice is vital for passing the exam.

Sir I have a question, please assist me with answering the question, it goes like this Chris is paid a regular 35 hours wee at a basic rate of $5. Overtime is paid at a premium of 50%. Chris is paid a time saved bonus whenever he completes his task in a shorter time than the budget time per unit as follows (normal hourly rate x 50% x time saved). The budgeted time (time allowed to produce each unit is 2.5 hours. During week 27 Chris worked 60 hours and had completed 35 units. What is Chris total salary? A 拢317 B 拢318 C 拢431.25 D 拢372

Chapter 18 (although there is little explain because there is no such thing as a standard bonus scheme – anything in the exam is following the instructions given in the question).

nazmana says

Jeremy Otter is paid basic salary of $10 an hour and overtime at time-and-a-quarter. Jeremy鈥檚 basic hours are 9 to 6 with an hour for lunch. Yesterday, Jeremy worked from 8 to 7. How much did Jeremy earn yesterday? *

sir how to calculate the salary in this?

John Moffat says

In future please ask this sort of question in the Ask the Tutor Forum and not as a comment on a lecture.

He worked 11 hours and so his basic pay will be 11 X $10 = $110.

His basic hours are 9 hours and so there were 2 hours of overtime. Therefore he will receive an overtime premium of 2 x 1/4 x 10 = $5.

So his total pay is $115.

Madhuradha18 says

Sir I can’t seem to get the answer for the last question (118.2% x 110.0%=130%) I can’t seem to get the 130% instead I’m getting 1.3002.

Asif110 says

Sir, for production activity , why not use actual hours over budgeted hours – that is what actually happened. We should measure that performance. Why expected hours over budgeted hours.

Asif110 says

According to your example, expected hours (26,000hrs) was needed to produce 65,000 units as per budgeted standard hour rate, which was being compared to 22,000hrs actually taken.

If you compare expected hours to budgeted hours via ratio, the latter which was 20,000hrs, was budgeted to produce 50,000 units, not 65,000 units.

So how can we compare the both via ratio ? They dont seem to have a common factor. Budgeted is for 50,000 units (20,000hrs), expected is to produce for 65,000 units (26,000 hrs).

Elaboration appreciated to the understanding of the Production volume Ratio (Activity Ratio).

John Moffat says

Although I have written the formula in the standard ACCA way (as you will see in the ACCA technical article), it is the same as simply dividing actual production (65,000 units) by the budgeted production (50,000 units), which is a ratio of 1.3.

How did we manage to produce more units than expected? By having more hours available than budgeted (the capacity ratio) and by working faster than expected (the efficiency ratio). Multiplying these two ratios together gives the production volume ratio.

Asif110 says

Hi sir. Great lecture.

Could you please explain the rationale behind associating overt timer premium connected to over work aside from customer request, and bonuses, to indirect costs ?

I did understand regarding sick leave and idle time – as they are no long doing direct labour over the products that are being produced. So due to their absence in the production of those items, they are thus now considered indirect expense.

Second, for labour turnover, why dont we divide the replacement by 100 (original employees) or 70 (employees remaining) and then multiply by a 100. Why find the average. What was the rationale behind that ?

Thanks alot for your lectures as always.

progressdewera says

Hallo,I have a question on labour turnover ratio. What do we look there…the number itself of employees left the organisation or the number of worker that joined after some had left for avoidable reasons.I am now confused there, may you kindly sir.

John Moffat says

It is the number who left and were replaced.

Let me give you two examples:

Suppose a company started the year with 10 employees. During the year 3 left. At the end of the year they had 12 employees. That means that they must have employed 5 new people. Of these 5, 3 were leavers who were replaced (the other 2 were new people and are not relevant for the formula).

Another. Suppose they started the year with 10 employees. During the year 3 left. At the end of the year they had 8 employees. That means they employed 1 new person and that 1 person replaced 1 of the leavers.

progressdewera says

alright thanks much,i understand now.

John Moffat says

You are welcome 馃檪

shazia786 says

Hi John

In the efficiency ratio – are the expected hours the same as standard & budgeted ?

John Moffat says

They are the standard hours for the actual production.

shazia786 says

Thank you John

taurusrichkid says

Are the formulaes given during the exam

John Moffat says

The formulae given the exam are printed at the beginning of our free lecture notes. However these do not include the formulae for labour – these you have to learn.

ahrarhassanbt says

sir

where i can get more practice questions?

John Moffat says

It is essential that you buy a Revision Kit from one of the ACCA approved publishers (BPP and Kaplan). They are full of exam-standard question to practice and practice is vital for passing the exam.

shanoy2436 says

Sir I have a question, please assist me with answering the question, it goes like this

Chris is paid a regular 35 hours wee at a basic rate of $5. Overtime is paid at a premium of 50%. Chris is paid a time saved bonus whenever he completes his task in a shorter time than the budget time per unit as follows (normal hourly rate x 50% x time saved).

The budgeted time (time allowed to produce each unit is 2.5 hours. During week 27 Chris worked 60 hours and had completed 35 units.

What is Chris total salary?

A 拢317

B 拢318

C 拢431.25

D 拢372

John Moffat says

You must ask questions like this in the Ask the Tutor Forum and not as a comment on a lecture.

ahrarhassanbt says

sir

which one is the chapter of discounts?

John Moffat says

Discounts are examined in Paper FA. They are not a specific topic in Paper MA.

aamnasalim says

mr.moffat in which chapter are the bonus schemes explained

John Moffat says

Chapter 18 (although there is little explain because there is no such thing as a standard bonus scheme – anything in the exam is following the instructions given in the question).

aamnasalim says

sir in timework can u please explain the meaning of paid at time and half .I cannot understand it

John Moffat says

Suppose the normal rate of pay is $10 per hour.

If they are paid time and a half for overtime work, then they are paid $10 + (1/2 x $10) = $15 per hour.

therki says

hi Mr. Moffat,

I am confused about when you said while calculating overtime premium (OP): ‘if it wasn’t over time’.

we are paying 30$ which is overtime. but 5@4 = 20 that would be basic element in that overtime and rest is OP?.

John Moffat says

The overtime is paid at the rate of $30 per hour (i.e. 1.5 x $20).

The normal rate is $20 per hour, so the overtime premium (i.e. the extra being paid) is $10 per hour.

claycam says

Will the ratios be available during the exam or do we have to learn?

John Moffat says

You have to learn!

claycam says

Thanks 馃檪

John Moffat says

You are welcome 馃檪