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Relevant costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Relevant costing

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • June 2, 2022 at 12:03 pm #657134
    Tumelo3
    Participant
    • Topics: 3
    • Replies: 1
    • ☆

    Labor
    100 hours of skilled and 56 hours of unskilled labor will be required for the upholstery and
    flooring work. Skilled labor is paid the market rate of $25/hour and is currently fully
    employed on another job, where they earn a contribution of $6/hour. Alternatively new
    skilled labor could be employed, but the new workers will require training at a cost of
    $14/hour for the first 10 hours they are working.
    Unskilled workers are currently paid $12/hour and each of the 5 workers is guaranteed a
    minimum wage of $420 per week. Each unskilled employee has enough work allocated to
    them for the next three weeks to earn $372 per week. The work to be done by the unskilled
    labor on Bow must be completed within the first week of the project starting and overtime
    is paid at time and half.
    What cost should be included in the quote for the skilled and unskilled labour?
    $_______ skilled labour $_______ unskilled labour

    Skilled labour $2,640 Unskilled labour $648
    The existing skilled labour can be used costing ($25 + $6) × 100 = $3,100
    OR new labour can be hired and trained costing $25 × 100 + $14 ×10 = $2,640
    Take the cheaper cost.
    The unskilled workers are guaranteed work for $420/$12 = 35 hours.
    They are currently working $372/$12 = 31 hours. Therefore there are 4 hours per week
    per worker spare capacity. There are 5 workers therefore 20 hours a week will have
    no cost, leaving 36 hours to be paid for at time and a half.
    36 × $12 × 1.5 = $648

    Sir please help me, I don’t understand how 36 hours to be paid for at time and a half was got

    June 2, 2022 at 3:31 pm #657148
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54684
    • ☆☆☆☆☆

    56 hours of unskilled workers is required and the work has to be done within 1 week.

    Each worker is guaranteed 35 hours of work. The are currently only working 31 hours and therefore have 4 free hours which will not be paid as overtime. There are 5 unskilled workers and so 5 x 4 = 20 hours will not need paying overtime whereas the remaining 36 of the 56 hours will have to paid as overtime.

    June 2, 2022 at 6:14 pm #657163
    Tumelo3
    Participant
    • Topics: 3
    • Replies: 1
    • ☆

    Oh! now I get, thank you very much Sir

    June 3, 2022 at 7:26 am #657184
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54684
    • ☆☆☆☆☆

    You are welcome.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Relevant costing’ is closed to new replies.

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