confusion in labour capacity ration
standard or budgeted 10000 hours to produce 25000, actual hours 11000
11000/10000 x 100 110%
8000 hours is for 20000
J
John MoffatTutor·
Which question are you referring to?
S
Saif·
Question number 3
labour capacity ratio
J
John MoffatTutor·
Do check back to my free notes and lectures.
The capacity ratio is simply looking at whether they got more or less about hours than they had budgeted on being available. It is not looking at how many units they managed to produce (that is looked at by the other ratios).
They budgeted on having 8,000 hours available but they managed to get 11,000 hours of labour. So the capacity ratio is 11,000/8,000
Again, do check back to our notes and lectures.
M
mrjonbainModerator·
Further down on this page John Moffat provides the following explanation-
"If no workers has been replaced, then at the end of the year there would be 80 – 45 = 35 workers.
Since there were actually 60 workers at the end of the year, it must mean that 60 – 35 = 25 workers were replaced.
The average number of workers during the year = (80 + 60) / 2 = 70.
Therefore the labour turnover rate = 25/70 = 35.7%"
C
Chris·
Short of a staffing crisis, a company would naturally look to retain staff and/or replace all of those that leave should that be their requirement. Therefore it is safe to assume that the 20 who were not replaced were let go of by the company.
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Ahmed Abdala Abdirahman·
80% Number one is confusing for me. I multiplied 1168 units by 1.
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mrjonbainModerator·
The key is that only the additional units qualify for the higher rates.
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Nayana·
80%
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HIzqeel·
Why I am not able to see start button.
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John MoffatTutor·
Maybe you need to scroll - the start button is on the bottom right of the screen containing the test.
D
dipeeka·
why not painters classified as indirect labour?
J
John MoffatTutor·
Because given that they work for a decorating company, they are actually doing the decorating.
D
darshan·
assembly workers in a factory making calculator can be classified as direct labour?
J
John MoffatTutor·
They are classified as direct labour (as explained in the free lectures on this).
The question asks if they will be classified as indirect labour, and of course they will not be :-)
H
Himanshi·
Please explain me questions no 2
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John MoffatTutor·
If no workers has been replaced, then at the end of the year there would be 80 - 45 = 35 workers.
Since there were actually 60 workers at the end of the year, it must mean that 60 - 35 = 25 workers were replaced.
The average number of workers during the year = (80 + 60) / 2 = 70.
Therefore the labour turnover rate = 25/70 = 35.7%
T
TANYA·
Q2) " during the year a total of 45 employees" ....
a) during last year OR this year ?
b) "Production workers" means wagers of day to day basis (direct labour), but "Employees" could mean direct and indirect labour both?
Thoughts? :) thank you kind Sir !
J
John MoffatTutor·
a) It is the year that both the first sentence and also the requirement refer to i.e. last year. (Otherwise it would be an impossible question anyway :-) )
b) Direct production workers are employees. Although employees could include other workers as well, how would you intend to do the question if you did not assume that they are the same workers? (You are going to have to get used to this kind of wording in the exam - this is actually a past exam question!!)
M
Mannan·
in question 1, is the extra rate that we are paying to produce extra units an indirect cost or direct cost?
J
John MoffatTutor·
A direct cost. They are paid based on the units produced.
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Joshua·
please help with quesion 1, whycant we directly multiply the 1.00 dollar per unit by the 1168
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John MoffatTutor·
Because it only additional units that qualify for the higher rates. So the first 500 are at $0.50 per unit, the next 500 are at $0.75, and so on.
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Madhu·
Can you explain about Q1 how come the 168 is not included in the 500 that has been multiplied with 0.75 because the questions states that 501 units to 1001 units must be multiplied with 0.75
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Esther·
could you explain question 3 because the units where different why wasn't that factor considered?
J
John MoffatTutor·
The capacity ratio is actual hours worked divided by the budgeted hours. The number of units is not relevant for the capacity ratio which is simply measuring whether more or less hours were available in total.
I do suggest that you watch my free lectures on this which go through each of the labour ratios. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
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maria·
100%
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ursinab·
Hi,
On question 3 about labour capacity, the solution says 11,000(actual)/8,000(budgeted) = 137.5% but the 8,000 are for 20,000 units while the 11,000 are for 25,000, wouldn't the solution have to be taking that into consideration?
Thanks
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nabiil·
the number of units is not taken into consideration
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alexandrapower·
Please can you explain the labour efficiency question. Why for the standard hours of actual production do we do the sum (25,000/20,000) x 8,000?
J
John MoffatTutor·
If it makes it more obvious to you, the standard time per unit is 8,000 hours / 20,000 units = 0.4 hours per unit.
Therefore the standard time for the actual production of 25,000 units is 25,000 x 0.4 hours = 10,000 hours.
T
TUSHAR·
Labour Efficiency Questions are quite easy
according to question ,
Company Budgeted = 20000 U In 8000 HRS
Actually Tooked = 25000U In 11000 HRS
So ,
Time Taken to produce each Unit = 8000/20000
Required time = 0.4 Hours for each Units
EXPECTED TIME = 25000 Units * 0.4 Hours = 10000 Hours
Actually Took = 11000 Hours { AS MENTIONED IN QUESTION }
LABOUR EFFICIENCY RATIO ---- EXPECTED TIME / ACTUAL TIME = 90.9 %
HOPE ITS HELPFUL !
A
aftab·
question no1 .calculating how much employer earn per day?
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Mitho007·
yes the question says during one day the employee produced the outputs.
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John MoffatTutor·
aftab2628: You will have to say which question you are asking about.
A
aftab·
CAN YOU PLEASE EXPLAIN WHERE DOES 168 COME FROM ?
M
MohamedSupporter·
The question says in one day an employee produced 1200 units in which 32 were rejected. so to calculate total amount that employee produced, you should first eliminate rejected production from the total. This will give you a total of 1168 unite (1200-21=1168). since the company are paying their employees on a piece work basis you have to allocate only the required amount of units for the given schemes. first you need to multiply 500 with 0.5. After that, multiply another 500 with 0.75. These two calculations will bring your total output to 1000 so only 168 units are left to be allocated. So just multiply those remaining 168 units with 1. you will get an answer of 793 (500*0.5+500*0.75+168*1)
standard or budgeted 10000 hours to produce 25000, actual hours 11000
11000/10000 x 100 110%
8000 hours is for 20000
labour capacity ratio
The capacity ratio is simply looking at whether they got more or less about hours than they had budgeted on being available. It is not looking at how many units they managed to produce (that is looked at by the other ratios).
They budgeted on having 8,000 hours available but they managed to get 11,000 hours of labour. So the capacity ratio is 11,000/8,000
Again, do check back to our notes and lectures.
"If no workers has been replaced, then at the end of the year there would be 80 – 45 = 35 workers.
Since there were actually 60 workers at the end of the year, it must mean that 60 – 35 = 25 workers were replaced.
The average number of workers during the year = (80 + 60) / 2 = 70.
Therefore the labour turnover rate = 25/70 = 35.7%"
The question asks if they will be classified as indirect labour, and of course they will not be :-)
Since there were actually 60 workers at the end of the year, it must mean that 60 - 35 = 25 workers were replaced.
The average number of workers during the year = (80 + 60) / 2 = 70.
Therefore the labour turnover rate = 25/70 = 35.7%
a) during last year OR this year ?
b) "Production workers" means wagers of day to day basis (direct labour), but "Employees" could mean direct and indirect labour both?
Thoughts? :) thank you kind Sir !
b) Direct production workers are employees. Although employees could include other workers as well, how would you intend to do the question if you did not assume that they are the same workers? (You are going to have to get used to this kind of wording in the exam - this is actually a past exam question!!)
I do suggest that you watch my free lectures on this which go through each of the labour ratios. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
On question 3 about labour capacity, the solution says 11,000(actual)/8,000(budgeted) = 137.5% but the 8,000 are for 20,000 units while the 11,000 are for 25,000, wouldn't the solution have to be taking that into consideration?
Thanks
Therefore the standard time for the actual production of 25,000 units is 25,000 x 0.4 hours = 10,000 hours.
according to question ,
Company Budgeted = 20000 U In 8000 HRS
Actually Tooked = 25000U In 11000 HRS
So ,
Time Taken to produce each Unit = 8000/20000
Required time = 0.4 Hours for each Units
EXPECTED TIME = 25000 Units * 0.4 Hours = 10000 Hours
Actually Took = 11000 Hours { AS MENTIONED IN QUESTION }
LABOUR EFFICIENCY RATIO ---- EXPECTED TIME / ACTUAL TIME = 90.9 %
HOPE ITS HELPFUL !