The full time equivalent is referred to the hours worked by a certain employee within a business on full time biases. There is a general calculation of full time equivalent that is approximately equals to 2,080 hours per year. The calculation for full time equivalent can be explained as under:-
8 hours x 5 working days per week x 52 weeks per year
= 2,080 hours
The calculation of full time equivalent is important because whenever a business hires part time employees to complete a certain the business can use the number of hours worked by part time employees to convert them in full time equivalent to find out how many part time employees equate full time employees.
There are a number of examples through which FTE can be calculated by using the number of working hours and number of hours worked in a particular month. For example there are 168 working hours in the month of January and the staff of a certain company works for 7,056 hours in this month. On the biases of this information the FTE can be calculated as 42 FTEs.
The 2,080 is an ideal and hypothetical figure where no sick leave, vacation, employee leave and other absentees from the work are counted. If we take these assumptions into consideration we well find out that actual FTE can be as low as 1, 680 hours per year.
Other Related Accounting Articles: