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I don’t understand the way they calculate staff cost per invoice, invoices per hour and cost of idle time.
QUESTION
An invoicing assistant works in a department with three colleagues. They are paid $8,000 per annum.
The department typically handles 10,000 invoices per week.
One morning they spend half an hour on the phone to their grandfather, who lives in Australia, at the
company’s expense. The cost of the call proves to be $32.
Required
From this scenario identify as many different performance measures as possible, explaining what each is
intended to measure. Make any further assumptions that you wish.ANSWER
Invoices per employee per week: 2,500 (activity)
Staff cost per invoice: $0.06 (cost/profitability)
Invoices per hour: 2,500/(7 ? 5) = 71.4 (productivity)
Cost of idle time: $32 + $2.20 (half-hourly rate) = $34.20 (cost/profitability)
You may have thought of other measures and probably have slight rounding differences.Which one do you want explaining?
I would have thought the first one would be obvious since there are 4 employees and 10,000 invoices a week!
Where are you finding this question? I assume you are using a Revision Kit from one of the ACCA publishers, in which case there should be explanations as well as answers.
Although I can see the answer, I don’t understand the way they calculate.
I want to know how to calculate to get the answer $0.06 for staff cost per invoice.
For invoices per hour, I want to know the reason why 2500 is divided by 7×5.
For cost of idle time, I don’t understand why $32 is added by $2.2. I don’t even know how and why $2.2 appears.There are 4 staff and so the cost is $32,000 per year.
There are 52 x 10,000 invoices a year.
Divide one by the other and you get the cost per invoice.Each employee handles 10,000/4 = 2,500 invoices a week.
Assuming 5 working days of 7 hours a day (the question says make assumptions), then each employee is working 35 hours a week.If an employee is paid 8,000 a year. Then with 52 week, 5 working days a week, 7 hours a day, then the cost per hour is $4.40.
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