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Hello sir kindly solve and explain this question this 80% efficiency is really confusing!
Question :
Product X requires 1.2 standard direct labour hours per unit manufactured. An efficiency ratio of 80% is to be budgeted for period 6. Budgeted sales and production of product X in period 6 are
Sales 19200 units
Production 18760 units
What is the direct labour hours budget for product X in period 6 ?Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers and workings.
If they were to be 100% efficient they would be budgeting on using 18,760 x 1.2 = 22,512 hours.
Since they are budgeting on being only 80% efficient they would budget for 22,512/80% = 28,140 hours.
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