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Employee A is a carpenter and normally works 36 hours per week. The standard rate of pay is $3.60
per hour. A premium of 50% of the basic hourly rate is paid for all overtime hours worked. During the
last week of October, Employee A worked for 42 hours. The overtime hours worked were for the
following reasons:
Machine breakdown: 4 hours
To complete a special job at the request of a customer: 2 hours
How much of Employee A’s earnings for the last week of October would have been treated as direct
wages?
A $162.00
B $129.60
C $140.40
D $151.20Sir,at first,l solved so:
36*3.60=129.6
and l didn’t take my consideration machinebrakdown because in that case,this is indirect cost2*1.80=3.60
129.6+3.6=133.2$
the correct answer is this
but l didn’t found in this listThe direct wages are all hours worked at the normal rate, whether overtime hours or not (42 x 3.60) + the overtime premium for the special job (2 x 50% x 3.60).
It seems that the answer is still not one of the choices given. As you sure you have typed the question correctly (and is there not an answer in the same book in which you found the question)?
Revision kit write that,if the overtime is applied by specific request,that is direct wage,but that is applied because of machine breakdown,this is indirect wage and working for 4 hours is not took a consideratio.
thats why,38*3.60+2*1.80=140.4
And answer is CMy mistake – sorry 🙁
The idle time due to the machine breakdown is indeed all an indirect cost. The remaining hours worked (i.e. 42 – 4 = 38 hours) at the normal pay rate of $3.60 are all direct labour.
In addition the premium for the hours worked on the special job (2 x 50% x 3.60) are direct labour also.
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