Sample Observations of a Claims Processor Made Over a 160-Hour

question 203

Multiple Choice

Sample observations of a claims processor made over a 160-hour work month reveal that the worker produced a total of 384 completed claims forms. The performance rating was 90%. The worker was idle 20% of the time (so that idle time should be subtracted from the total time when computing the average observed time) . The allowance factor is 10%. What is the standard time per unit?

• A) 0.42 minutes
• B) 16.0 minutes
• C) 17.4 minutes
• D) 20.0 minutes
• E) 21.7 minutes

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Definitions:

Fixed Manufacturing Cost

Costs that do not vary with the level of production, including salaries of managers and rent of the factory.

Production Volume

The total number of units of a product or service produced over a specific period of time.

Total Cost Data

The sum of all costs associated with the production or delivery of goods and services.

Mixed Cost

A cost that contains both variable and fixed cost components, making it partly dependent on the level of output or activity.