Question

Wonderland Post Office: Mail sorting time variance One of the operations in the Wonderland Post Office is a mechanical mail sorting operation. In this operation, handwritten letter mail is sorted at a rate of one letter per second. An operator sitting at a keyboard mechanically sorts the letter from a three-digit code. 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 27,000,000 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 125 hours in the month. a. How many temporary employees should the manager hire for December? 57 employees b. If each temporary employee earns a standard $13 per hour, what would be the direct labor time variance if the actual number of additional letters sorted in December was 26,208,000? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. $ 4,300 Unfavorable

Answer 1

Time required to complete additinal work in December = 27000000/3600 = 7500 hours

Number of employees required = working hours required / working hours per month per employee

                                                        = 7500 / 125 = 60 employees.

Standard time requirement for sorting 26208000 letters = 26208000 / 3600 = 7280 hours

Direct labor time variance = standard rate per hour ( standard time - actual time )

                                               = 13 (7280 - 7500)

Direct labor time variance = $2860 unfavourable.

We have divided number of letters by 3600 to calculate hours because there are 3600 seconds in a hour. And for sorting each letter machine requires one second each .