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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Accounting for labour
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?
