Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Budgeting Labour Hours Revision Kit Page 68 Qn 16.10
- This topic has 3 replies, 2 voices, and was last updated 9 years ago by John Moffat.
- AuthorPosts
- February 16, 2015 at 10:39 pm #228719
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
February 17, 2015 at 7:22 am #228763Just 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.
February 17, 2015 at 10:48 am #228860Thank u so much Sir. it makes sense now 🙂
February 17, 2015 at 12:52 pm #228892You are welcome 🙂
- AuthorPosts
- You must be logged in to reply to this topic.