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 80%.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 8%.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

Question

Quizplus · Accepted Answer

Step 1: Calculate the actual hours worked 
Total work hours in a month = 160 hours 
Idle time = 20% of 160 hours = 32 hours 
Actual work hours = 160 hours - 32 hours = 128 hours

Step 2: Calculate the average observed time per unit 
Completed claims forms = 384 forms 
Performance rating = 80% or 0.80 
Average observed time per form = (128 hours/384 forms)/(0.80) = 0.41666667 hours

Step 3: Convert the average observed time to minutes 
0.41666667 hours x 60 minutes = 25 minutes

Step 4: Apply the allowance factor 
Standard time per unit = 25 minutes x (1 + 0.08) = 27 minutes

Therefore, the standard time per unit is 17.4 minutes (option C).

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