One of the operations in the United States Postal Service is

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

Solution

Solution a:

Estimated number of additional pieces of mail in december = 24192000

Monthly hours of a temporary employee = 160 hours

Nos of seconds of temporary employee in 1 month = 160 * 3600 = 576000 seconds

Nos of letter sorted out by 1 temporary employee in 1 month = 576000*1.50 = 864000 letter

Nos of temporary employee to be hired in decmeber = 24192000 / 864000 = 28 employees

Solution b:

Actual number of additional letter sorted out = 23895000

standard hours required for actual letter sorting = 23895000 / (1.5*3600) = 4425 hours

Actual number of hours taken = 28 * 160 = 4480 hours

Labor time variance = (SH - AH) * SR = (4425 - 4480) * $16.40 = $902 Unfavorable