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Employee A is a carpenter and normally workers 36 hours per week. The standard rate of pay is $3.60 per hour. A premium of 50% of a 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 hoursHow much of employee A’s earnings for last week of October would be treated as direct wages?
A $162.00
B $129.60
C $ 140.40
D $151.20I am getting $133.20 from workings and I cannot figure out where I went wrong.
The machine breakdown time of 4 hours is idle time, and so the total pay for these 4 hours is an indirect cost.
That leaves 38 hours worked and the basic pay for these hours is 38 x $3.60 = $136.80 is a direct cost.
In addition 2 of these hours were overtime worked at the requisition of a customer, and so the overtime premium for these 2 hours is also a direct cost. 2 hours x 50% x $3.60 = $3.60.This gives a total direct cost of 136.80 + 3.60 = $140.40
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