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Dear Sir,
I came across part of question which it is not fully clear. Could you please help:
Assembly labour: it take 30 minutes to assemble the radio and the assembly workers are paid $ 12.60 per hour. It is estimated that 10% of hours paid to the assembly workers is for idle time.
Answer provided
30/60 *12.50 *100/90
Why isn’t the idle time included in calculating the cost of labour?
My understanding is: as there is 10% of Idle time, 30 minutes is 90% time that we expect to pay the cost per hour should be 12.50/60*30 =6.25Thanks
Gabriella
For every 100 hours that we pay, 10 of the hours are idle and therefore only 90 hours are actually worked.
Therefore for every 90 hours of work needed, we have to pay for 100 hours.
Therefore, if a radio needs 0.5 hours of work, then we have to pay for 0.5 x 100/90 hours at $12.60 per hour.
(Edwards also has exactly the same type of problem in calculating the cost of the wire needed)
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