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Dear Tutor:
Question says:
“It takes 2 labour hours of work to produce 1 tonne of brown rice and labour is normally paid $18 per hour. Idle time is expected to be 10% of hours paid; this is not reflected in the rate of $18 above”
My interpretation:
Labour cost per unit (2hrs x $18 x 110%) $39.60
Question answer:
Labour cost per unit (2hrs x $18 x 10/9) $40.00I know it is something so simple but I dont get it!
Many thanks!
Idle time is expected to be 10% of hours paid would mean whatever is paid it’s 90% of the payment and to make it 100%, you would multiply $18 by 100/90 which means if this is 90% then what would be 100%..
acca13 is correct.
You have simply added 10% to the hours worked. But if you paid for 2 x 110% = 2.2 hours. Then the idle time would be 10% of hours paid = 10% x 2.2 = 0.22 hours.
This would mean that the hours worked would be 2.2 – 0.22 = 1.98 hours 🙂
But they should be working 2 hours.For every 100 hours paid, 10% of them would be idle, and so 90% or 90 hours would be worked. So you pay 100 hours for every 90 hours of work.
For 2 hours of work, you pay for 2 x 100/90 hours.
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