Question

3. Newton Ltd manufactures three products. The expected production levels for each product are shown below.

	Product 1	Product 2
Budgeted production in units	2,700	4,100

Two types of labour are used in producing the three products. Standard times per unit and expected wage rates for the forthcoming year are shown below:

	Product 1	Product 2
Hours per unit
Skilled labour	3	1
Semi-skilled labour	4	4

Skilled labour is to be paid at the rate of $9/hour and semi-skilled labour at the rate of $6/hour.

Required:

Complete the following:                                                                                            (Marks 5)

1.                                                                              

• The number of hours of skilled labor required is
• The cost of this labour is $

• The number of hours of semi-skilled labor required is
• The cost of this labour is $

Answer 1

Number of hours of skilled labour required is: Budgeted production in units * hours required per unit

=Number of hours of skilled labour required for product1 + Number of hours of skilled labour required for product2

=(2700*3) + (4100*1)

=12200hours.

The cost of skilled labour is: Number of hours required for production * Rate per hour

=12200Hours * $9/hour

=$109800

Number of hours of semi-skilled labour required is: Budgeted production in units * hours required per unit

=Number of hours of semi skilled labour required for product1 + Number of hours of semi skilled labour required for product2

=(2700*4) + (4100*4)

=27200hours

The cost of semi skilled labour is: Number of hours required for production * Rate per hour

=27200hours *$6/hour

=$163200

Thankyou.....