A company operates a factory which employed 40 direct workers throughout the four-week period just ended. Direct employees were paid at a basic rate of $4.00 per hour for a 38-hour week. Total hours of the direct workers in the four-week period were 6,528. Overtime, which is paid at a premium of 35%, is worked in order to meet general production requirements. Employee deductions total 30% of gross wages. 188 hours of direct workers’ time were registered as idle.
Calculate the direct and indirect costs for the four-week period just ended. Calculate:
Direct labour cost
Indirect labour cost
In the given answer, overtime is calculated as: Total time - basic time.
Since there is also idle time, why the overtime is not calculated as follows: Total time- basic time- idle time.
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Idle time
Because they will still be getting paid even though they are idle hours.
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