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Hello Sir,
I have come across one small doubt. Please help me with it.
Question: Jojo is an assembly worker earning $12 per hour for a basic 35 hour week. Any overtime premium is paid at a premium of 50%
In the last four week period, Jojo was paid for 150 hours. During this time 15 hours were classes as idle due to a machine breaking down. Also included in the number of hours are 4 hours overtime spent working for an urgent job at the request of the customer.
How much should be charged to the production overhead account for the four week period?.
Solution: Idle time+general time= (15 hrs * $12)+((10 hrs-4hrs)*$6)=$216
Sir, for calculation of general overtime why do we subtract 4 from 10? and from where have we got 10 hrs?.They are paid for a 35 hour week, therefore in the 4 week period they should work 140 hours.
Therefore they worked 10 hours of overtime. 4 hours were are the request of the customer and are therefore direct costs, the other 6 are indirect costs (as explained in my free lectures).
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