- This topic has 1 reply, 2 voices, and was last updated 8 years ago by
.
- Posts
Hi, this question appears in my Kaplan F2 text book, but doesn’t fully explain the answer and i can’t seem to get my head around it!
A contract cleaning firm estimates that it will take 2,520 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, the budgeted labour cost will be –
A) £19,278
B) £21,420
C) £23,562
D) £23,800The answer is given as D, and the workings are –
2,520/0.9 = 2,800 hours.
2,800 x £8.50 = £23,800Why are the hours divided by 0.9? Surely if the hours are lost the figure should either by multiplied by 0.9 to get the actual cleaning hours worked, or by 1.1 to cover the extra hours required? The answer in the book does not fully explain this! Please could you explain to me the above answer?
Many Thanks
Pippa
Imagine that they pay for 100 hours.
10% of those hours (so 10 hours) will be lost time, and so only the remaining 90 hours will actually be worked.
So…..for every 90 hours actually worked they will need to pay for 100 hours.
So for 2,520 hours actually worked, they will need to pay for 2,520 x 100/90 = 2,800 hours
- The topic ‘Budgeting Labour Costs’ is closed to new replies.