This topic illustrates the impact of cost dilution based on semimonthly periods with more or fewer business days (96 vs 88, for example.). The diluted (effective) cost rate will vary based on hours worked and an even 86.667 hours per month (2080 annual business hours/24 periods). As a result, a shorter period can have a lower cost rate than a longer period since the calculation is based upon hours worked and not hours in period.
Modified on: Mon, 11 Jun, 2018 at 3:25 PM
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