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hi
confused about a question in kaplan book ma1 2015 edition page 148 question 1
a job requires 2400 actual labour hours to complition and it is anticipated that there will be 20% idle time
if the wage rate is $10 per hour ,what is the budgeted labour cost for the job ?
a- 19200
b-24000
c-28800
d-30000
answer at the back is 2400 x 100/80 =30 x 10= 30000 = option d
in my mind it should be c
2400 x 1.2 =2880×10=28800 = option cam i wrong . if i am why are we multiplying actual labour hours with 1.25 rather then 1.20 in the answer at the back
thanksWorkers will work some amount of hours – this figure you should find.
Out of this total time they will have idle time 20%, and actual labour time 2,400 (so this 2,400 is 80% of total time).And the company will pay for total time, that is 30,000. This should be budgeted for the work.
Hope this helps
Or think of it like this:
Total hours paid – idle hours = hours worked
100 – 20 = 80
Hours worked = 2,400, so hours paid for = 2,400 x 100/80 = 3,000
3,000 hours paid for at $10/hour = $30,000.
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