calculate the loss or profit on account of loss of production from labour turnover 618389

The profitability position of M/s Pioneer Industries Ltd for a year is as follows:

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Annual turnover		200
Variable costs:
Direct material	60
Direct labour	40
Variable overheads	50	150
Marginal contribution		50
Fixed overheads		10
Profit for the year		40

The profit for the year did not match with company’s expectation and the works management attributed it to labour turnover.

Analysis of data revealed the following:

	Direct labour hours
Permanent workmen worked during the year:	9,60,000
Apprentice workmen worked:	80,000
Total direct labour hours:	10,40,000

The effectiveness of direct labour hours put in by apprentice workmen was 50% and the delay in replacing against the separations resulted in a loss of 20,000 direct labour hours. Calculate the loss or profit on account of loss of production from labour turnover.

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