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labour budgets

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › labour budgets

  • This topic has 3 replies, 2 voices, and was last updated 11 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • June 2, 2014 at 9:01 am #172555
    Miss NM
    Member
    • Topics: 12
    • Replies: 23
    • ☆

    Hi Sir , kindly help me with the following question :

    A job requires 2400 actual labour hours for completion but it is anticipated that idle time will be 20 % of the total time required. if the wage rate is $10 per hour , what is the budgeted labour cost for the job , including cost of idle time?

    A. $19200
    B. $24000
    C.$28800
    D.$30000

    June 2, 2014 at 12:39 pm #172620
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    For every 100 hours that we pay for, 20 hours will be idle, and therefore 80 hours will be worked.

    (Or to put it the other way round – if we want 80 hours work, then we need to pay for 100 hours).

    So…..for 2400 hours work, we need to pay for 2400 x 100/80 hours. We will pay then at $10 per hour.

    June 2, 2014 at 6:21 pm #172939
    Miss NM
    Member
    • Topics: 12
    • Replies: 23
    • ☆

    Thank you so much Sir.

    Sir i’m also having problems with test no 2 in investment appraisal:

    A company is considering investing in a new machine that will cost $270,000 and will last for 4 years with a
    scrap value at the end of 4 years of $20,000.
    It is expected to generate operating cash inflows each year as follows:
    Year 1: $50,000
    Year 2: $180,000
    Year 3: $100,000
    Year 4 $50,000
    The cost of capital is 12% per annum.

    What is the Internal Rate of Return of the machine (to the nearest %)?

    Actually i cannot understand from where you got discounting as 20%

    June 3, 2014 at 8:01 am #173107
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Please start a new thread when it is a different question.

    To calculate the IRR you need to make two guesses and then approximate between them.
    Here, one of the guesses was at 20%, but any guess will do.

    (It would be a good idea to watch my free lecture on calculating the IRR)

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