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budgeting

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › budgeting

  • This topic has 3 replies, 3 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • May 13, 2016 at 6:39 pm #314984
    nuher
    Member
    • Topics: 1
    • Replies: 0
    • ☆

    question: A contract cleaning firm estimates that it will take 2520 actual cleaning hours to clean an office block. Unavoidable interruptions and lost time are estimated to take 10% of the workers’ time. If the wage rate is $8.50 per hour. What would be the budgeted labour cost?
    Please do explain the workings

    May 13, 2016 at 6:42 pm #314986
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54684
    • ☆☆☆☆☆

    For every 100 hours paid, they will lose 10 hours and therefore only work for 90 hours.
    So for every 90 hours of work, they need to pay for 100 hours.

    So for 2520 hours of work they need to pay for 100/90 x 2520 hours which is 2,800 hours (at $8.50 per hour).

    February 25, 2024 at 3:44 am #701056
    anqa
    Participant
    • Topics: 17
    • Replies: 10
    • ☆

    I can’t understand this question
    From where did this 90 hours came
    I cant understand why it is paid for 100 hours

    February 25, 2024 at 7:45 am #701068
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54684
    • ☆☆☆☆☆

    The question says that 10% of the workers time is lost, which means only 90% of the time is actually spent working.

    Therefore for every 100 hours they paid for, 10% x 100 = 10 hours is lost, and 90% x 100 = 90 hours is actually worked.

    Use any number you want – using 100 is easiest because we are looking at percentages – but the end result will be the same.

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