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Budgeted total cost for the next period question

Forums › ACCA Forums › ACCA MA Management Accounting Forums › Budgeted total cost for the next period question

  • This topic has 0 replies, 1 voice, and was last updated 7 years ago by Avatarkingkongsajang.
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  • September 27, 2018 at 4:27 pm #475888
    Avatarkingkongsajang
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    • Topics: 95
    • Replies: 75
    • ☆☆

    Here’s the question

    114) 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.

    Okay so my question is, why do you divide my 0.8 and not multiply by 1.2 (I.e increase time taken by 20% to cover the 20% idle time)

    I’m still stuck after watching lectures.

    Kind regards,

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