Question

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 1.5 letters 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 24,192,000 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 $16.40 per hour, what would be the labor time variance if the actual number of additional letters sorted in December was 23,895,000? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. $ Unfavorable

Answer 1

Answer and Explanation:

The computation is shown below

a. The number of temporary employees is

= Time required ÷ time workerd

where

The time required is

= (24,192,000 ÷ 1.5 letters per second) ÷ 3,600 seconds per hour

= 4,480 hours

ANd, the time work is 160 hours

So, the number of temporary employees is

= 4,480 hours ÷ 160 hours

= 28 employees

b. The labor time variance is

= (Standard time - actual time) × wage rate

where,

Standard time is

= 23,895,000 ÷ (1.5 × 3,600)

= 4,425 hours

ANd, the actual hours is

= 28 employees × 160

= 4,480 hours

And, the wage rate is $16.40

So, the labor time variance is

= (4,425 hours - 4,480 hours) × $16.40

= $902 unfavorable