Question

Direct Labor Standards for Nonmanufacturing Operations One of the operations in the Wonderland Post Office is a mechanical mail sorting operation. In this operation, letter mail is sorted at a rate of one letter per second. The letter is mechanically sorted from a three-digit code input by an operator sitting at a keyboard. The manager of the mechanical sorting operation wants to determine the number of temporary employees to hire for December. The manager estimates that there will be an additional 39,168,000 pieces of mail in December, due to the upcoming holiday season. Assume that the sorting operators are temporary employees. The union contract requires that temporary employees be hired for one month at a time. Each temporary employee is hired to work 160 hours in the month.

a. How many temporary employees should the manager hire for December? employees b. If each temporary employee earns a standard $16 per hour, what would be the labor time variance if the actual number of additional letters sorted in December was 37,980,000? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. $ Unfavorable

Answer 1

Answer:

a. How many temporary employees should the manager hire for December?

Particulars	Explanation	Amount($)
Number of letter		39,168,000
Number of hours required	39,168,000 / (60 minutes * 60 Seconds)	10,880
Number of employees required	10,880 / 160	68

Therefore,

68 employees are needed to work 160 hours in a month.

b. We have to calculkate the variance

Particulars	Explanation	Amount($)
Number of letters		37,980,000
Number of hours required	37,980,000 / 3,600	10,550
Actual hours at standard cost	10,550*$16	168,800
Standard cost	10,880*16	174,080
Variance	174,080-168,800	-5,280

Therefore,

Variance = -5280 is favorable variance

Here, minus sign indicates the favorable variance