Question

ADM 2 United States Postal Service: Mail sorting time variance REAL WORLD One of the operations in the United States Postal Service is a mechanical mail sorting operation. In this operation, handwritten letter mail is sorted at a rate of 1.5 letters 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 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? B. If each temporary employee earns a standard $17 per hour, what would be the direct labor time variance if the actual number of additional letters sorted in December was 23,895,000?

Answer 1

1. Calculation of number of temporary employees required,
   1. Number of seconds required for the additional pieces of mail is calculated as, (number of additional pieces of mail)÷(time taken for 1 mail) that is 24192000÷1.5 = 16128000 seconds, that is 16128000÷3600 seconds per hour = 4480 hours.
   2. Therefore number of temporary employees required = number of hours required÷hours per employee = 4480÷160 = 28 employees.
2. Direct labour time varience,
   1. Standard hours for actual output that is, time that should have been taken for 23895000 mails is 23895000÷1.5 = 15930000 seconds that is 15930000÷ 3600 seconds = 4425 hours.
   2. Labour time varience = (standard hours - actual hours taken)*rate per hour, that is (4425 hours - 4480 hours)17 per hour = 935 adverse.