# Production Budgets

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Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
i though i had these fairley much in the bag but ever now and again machine hours and labour hours are stumping me.

Currently working through december 2007 Mac Paper and really stuck with 1.1 c and d.

any help or explanation would be great

Thanks

Vic

• Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
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A-Vic wrote: »
i though i had these fairley much in the bag but ever now and again machine hours and labour hours are stumping me.

Currently working through december 2007 Mac Paper and really stuck with 1.1 c and d.

any help or explanation would be great

Thanks

Vic

I actually got this right but worked it out in a slightly different way. I'll open messenger just gonna get a cuppa
• Registered Posts: 585 Epic contributor 🐘
Options
A-Vic wrote: »
i though i had these fairley much in the bag but ever now and again machine hours and labour hours are stumping me.

Currently working through december 2007 Mac Paper and really stuck with 1.1 c and d.

any help or explanation would be great

Thanks

Vic

From Dec 2007 Paper

Production
• Division Q owns 5 machines, all of which are depreciated at a cost of £200,000 per month.
• Each machine can operate for a maximum of two 7.5 hour shifts a day for 20 days a month.
• Each machine can produce 120,000 games per month when operating at full capacity.
• Each game requires the same time in production.
• Other fixed production overheads are £40,000 per month per machine.
• Fixed production overheads are absorbed on the basis of budgeted machine hours.
Labour
• Each machine requires 5 operators who each cost £20 per hour. Operators work a flexible hours
system which means they are paid only for the number of hours required in production, which is the
same as the machine hours.
• Each month has 20 working days.

TASK 1.1 C number of games produced

(a) per machine hours

Each MACHINE is working at 15 hours (2 shifts @ 7.5 hrs) per day
there are 20 days in a month
therefore monthly machine hours = 15 x 20 = 300 hours per machine

Each Machine produces 120,000 games per month (3rd bullet point)

therefore for every machine hour (120,000 / 300=) 400 games can be produced.

(b) Each machine requires 5 operators
machine runs for 15 hrs therefore labour hrs = 15 x 5 = 75 hrs per day
there are 20 days in a month
therefore monthly labour hours = 20 x 75 = 1500 hours

Each Machine produces 120,000 games per month (3rd bullet point)

therefore (120,000 / 1500=) 80 games produced per Labour Hour