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A job cost estimates include 630 productive labour hours. In, addition, it is anticipated that idle time will be 10% of the total hours paid for the job. The wage rate is $12 per hour.
What is the total estimated labour cost?
(a) $6,804
(b) $7,560
(c) $8,316
(d) $8,400
Correct answer is $8,400
But my answer is option a and option cIf 630 productive hours are needed, this is after the idle hours.
If 10% of hours paid for are idle, 630 represents the remaining 90% productive hours. 100% of the hours is therefore 630/0.9 = 700. [Check: 90% of 700 = 630].
Labour cost is therefore 700 x $12 = $8,400
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