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Hello Sir
Kindly help me out on this question:
A company manufactures a single product M. Budgeted production output of product M during August is 200 units. Each unit of product M requires 6 labour hours for completion and PR Co anticipates 20 per cent idle time. labour is paid at a rate of $7 per hour. what is the direct labour cost budget for August?
my qsn is that in the answer they have used 25% of active time instead of 20% of total time. i dont understand why?
please help.
thanks
Just suppose that they paid for 100 hours. Then 20% x 100 = 20 hours would be idle, and therefore 80 hours would be worked.
So, for every 80 hours actually worked then 20 hours would be idle. The idle time is therefore 20/80 or 25% of the hours actually worked.
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