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Stall working to assemble products are paid $10 per hour, and any hours over 35 per week are paid at a rate of $15 per hour. Last week, an employee was paid for 42 hours, including three hours during which he was idle due to machinery breakdown. How much of the employee’s wages for last week would be treated as an indirect cost?
$105
$65
$30
$35
I dont know the actual answer, could you please help me understand it.Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – it has answers and explanations.
They paid for 7 hours over and above the standard 35 hours.
3 of these hours were for idle time and so the whole payment for these hours is an indirect cost.
The other 4 hours were overtime and the overtime premium of $5 per hour is an indirect cost (because it is general overtime rather than for a specific job at the customers request).
This is all explained in my free lectures on accounting for labour. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
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