Q) Production for the next period is 4,800 units. Each unit requires five labour hours to make. Labour is paid $10 per hours. Idle time represent 20% of the total labour time.
My answer working:
4,800 x 5 = 24,000 total labour hours
24000 x 10 = 240,000 (total abour cost)
However, there is idle time, hence it is 20% of 24,000 total labour hr 4,800
4,800 x 10 = 48,000 total idle cost
240,000 + 48,000 = 288,000 (total labour cost), howeve the answer is $300,000.
Can please help, I do not understand why the answer is B$300K.
Thank you.
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Budgeted total labour cost for the next period?
9y ago#1You have the idle time wrong.
For every 100 hours they pay for, 20 will be idle and therefore 80 will be worked.
Ot putting it the other way round, for every 80 hours worked they will have to pay for 100 hours.
The need to worked 24,000 hours, and therefore they need to pay for 100/80 x 24,000 = 30,000 hours.
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