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Im doing a question in the revision kit.
Budgeted production output in units is 200.
6 Labour hrs is required for completion.
And they anticipates 20 per cent idle time.
Labour is paid at $7 per hour.
What is the Labour cost Budget?My working is
200 x 6hr = 1200
Idle Time 20% of 1200 = 240
there fore 1200+240 = 1440 x 7 = 10,080
which is incorrectInstead, the kit use 25% and i dont understand why
can you please explain.Thank you very much.
For every 100 hours that they pay for, 20 hours will be idle and therefore only 80 hours will be worked.
Putting it the other way round, for every 80 hours that they work, 20 hours will have been idle.
So the idle hours are 20/80 = 25% of the hours needed for the work.
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