question archive One of the operations in the United States Postal Service is a mechanical mail sorting operation
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One of the operations in the United States Postal Service 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 operation sitting at a keyboard. The manager of the mechanical sorting operating wishes to determine the number of temporary employees to hire for December. The manager estimates that there will be an additional 35,100,000 pieces of mail of 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 hire to work 150 hours in the month.
(a) How many temporary employees should the manager hire for December?
(b) If each employee earns a standard $ 16 per hour, what would be the labor time variance if the actual number of letters sorted in December was 34,020,000?
(a) Standard Sorts per Minute × Standard Minutes per Hour = Standard Sorts per Hour (per employee)
60 sorts per min. × 60 min. per hr. = 3,600 standard sorts per hr.
Pieces of Mail ÷ Standard Sorts per Hour = Number of Hours Planned
35,100,000 letters ÷ 3,600 sorts per hr. = 9,750 hrs. planned
Number of Hours Planned ÷ Hours per Temporary Employee per Month = Number of Hires
9,750 hrs. ÷ 150 hrs. = 65 temporary hires for December
(b) Actual pieces sorted = 34,020,000
Actual Pieces of Mail Sorted ÷ Standard Sorts per Hour = Standard Number of Hours for Actual Production
34,020,000 ÷ 3,600 standard sorts per hr. = 9,450 standard hrs. For actual production
Actual hours staffed.................................................................................. 9,750
Standard hours for actual production....................................................... 9,450
Excess of actual over standard hours........................................................... 300
Standard hourly rate............................................................................... × $16
Direct labor time variance x unfavorable................................................ $4,800