Dear sir! I'm facing problem with this question please help me solve it or provide solution I recommend.
Question: a business has a factory in which the 40 employees are paid at hourly rate of $6.80 per hour for 35 hours a week. Any overtime hours are paid at a rate of $9.00 per hour. Each unit of product takes an average of 2 hours to produce and in an average week each of the employees works 3 hours of overtime.
In an attempt to improve productivity the management is considering investing some new machinery which it is anticipated will reduce the time required for each unit by 15 minutes. It is hoped that there will now be no overtime worked.
What is the effect on the total labour cost and the labour cost per unit of the increase in productivity?
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Accounting for labour
20d ago
19d ago#1Currently the employees are working in total 40 x (35 + 3) = 1 520 hours a week and are therefore producing 1520/2 = 760 per week.
If the labour time is reduced by 15 mins and so takes 1.75 hours per unit then without working any overtime (and so working in total 40 x 35 = 1400 hours) they will be able to produce 1400/1.75 = 800 units per week.
If you have problems calculating the costs then ask again (but try yourself first :-) )
19d ago#2John Moffat wrote:
Currently the employees are working in total 40 x (35 + 3) = 1 520 hours a week and are therefore producing 1520/2 = 760 per week.
If the labour time is reduced by 15 mins and so takes 1.75 hours per unit then without working any overtime (and so working in total 40 x 35 = 1400 hours) they will be able to produce 1400/1.75 = 800 units per week.
If you have problems calculating the costs then ask again (but try yourself first :-) )
Thank you so much sir!!
19d ago#3You are welcome :-)
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