Saturday, September 21, 2019

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 two letters per second

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 two 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 wishes to determine the number of temporary employees to hire for December. The manager estimates that there will be an additional 41,472,000 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?
b. If each employee earns a standard $15 per hour, what would be the labor time variance if the actual number of letters sorted in December was 41,220,000?

Answer:


a. 
Standard Sorts per Minute × 
Standard Minutes per Hour   = 
Standard Sorts per Hour 
(per employee) 
120 sorts per min. × 60 min. per hr. =   7,200 standard sorts per hr. 
Pieces of Mail ÷ 
Standard Sorts per Hour 

=   Number of Hours Planned 
41,472,000 letters ÷ 7,200 sorts per hr. =   5,760 hrs. planned 
Number of Hours Planned ÷ 
Hours per Temporary Employee per Month 

=   Number of Hires 
5,760 hrs. ÷ 160 hrs.   = 36 temporary hires for December 
b. Actual pieces sorted = 41,220,000 
Actual Pieces of Mail Sorted ÷ 
Standard Sorts per Hour 

=   Standard Number of Hours 
for Actual Production 
41,220,000 ÷ 7,200 standard sorts per hr. = 5,725 standard hrs. for actual 
production 
Actual hours staffed……………………………………………………………… 5,760 
Standard hours for actual production………………………………………   5,725 
Excess of actual over standard hours……………………………………… 35 
× Standard hourly rate…………………………………………………………… $  15 
Direct labor time variance—unfavorable……………………………………… $   525 

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