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Good Evening Mr John,
Thanks for the lectures, you are awesome. Please I have 2 questions for you;
1)When it is said ” overtime is paid at time and a quarter” what does it mean?
2)Skilled workers are considered to be direct workers and are paid $10 per hr. They worked 20hrs overtime this week, 12hr on specific orders and 8 on general overtime. Overtime is paid at a rate of time and a quarter. I am am required to calculate total overtime pay considered to be direct cost?
This is what was given as the solution
Specific time (direct cost) =12hrs ×$10×1.25
General overtime (direct cost) = 8hrs×$10×1
” (indirect cost) = 8hrs×$10×0.25I do not understand how 1.25 was gotten and why it was split in general overtime as 1 for direct cost and.0.25 as indirect cost.
Pls help,
Thanks.
1) If overtime is paid at ‘time and a quarter’, it means that for every hour overtime they work you will pay them for 1.25 hours.
So….if you pay workers $5 per hour and they work 20 hours of overtime, then the amount you will pay them for the overtime will be 20 x 1.25 x $5 = $125
2) Looking back at my example in (1), for the overtime work they are paying an extra $25 above what they would normally pay (normally they would be paying 20 hours at $5 = $100).
If overtime is for a specific job, then all the cost of it is treated as a direct cost.
If it is just general overtime (not for any specific job) then only the normal rate ($100) is treated at a direct cost, and the extra ($25 in my example) is treated as an indirect cost.Thank you so much Mr. John. You are really awesome…. making very easy things that would otherwise be very difficult. Keep up the good work.
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