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Max il paid $10, 000 an hour for straight-time and $15, 000 an hour for overtime. In one week, he worked 42 hours, which included 2 hours of overtime. Compensation would be recorded as:
1:Direct labour=?
2: Manufacturing overhead =?It was a multiple choice qn and the book of solved exams recorded 1: $430, 000 and
2: $0(nil) but I think thé answer
is 1: $420, 000 and 2: $10, 000What is my position sir ?
Are you sure that the question gave no other information?
The reason is that the $420,000 is always recorded as direct labour.
The overtime premium of $10,000 is recorded also as direct labour but only if it was at the specific request of a a customer. If it is just general overtime, then it is recorded as indirect labour (i.e. overhead).If there was no other information in the question, then you would assume that it was general overtime in which case your answer would be correct.
Thanks sir. Afterall that book seems to have a lot of errors like I found that they got Marginal costing profit greater than absorption. There are no narrations in their MCQs.
Thanks very much indeed.Which book are you using?
All the Revision Kits do have a few errors, although the BPP Revision Kit seems to have the fewest. (And certainly for BPP and Kaplan they do have an errata sheet online which corrects most of the errors. I don’t know whether or not Becker does.)
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