- This topic has 3 replies, 2 voices, and was last updated 9 years ago by
.
- Posts
Hi sir, I have a few questions
This is from Kaplan exam kit:
Budgeted production in a factory for next period is 4800 units. Each unit requires five labour hours to make. Labour is paid $10 per hour. Idle time represents 20% of the total labour time.
What is the budgeted total labour cost for the next period?
I have a few questions:
1. Each unit requires five labour hours, does it include the idle hours?
2. Is it 20% of 5 hours, or 20% on top of 5 hours?
3. Does budgeted total labour cost include idle time or just standard cost?Thanks!
1. They require 5 hours to make, so it means they actually pay for more hours of which 20% are idle.
2. For every 100 hours they pay for, they will be idle for 20 hours and therefore work for 80 hours. (So for every 80 hours they will need to pay for 100 hours)
3. The budgeted labour cost will be the total they pay for labour. (So for every 80 hours they work then will budget on paying $1,000 (100 hours paid and $10 per hour).)
- You must be logged in to reply to this topic.