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Sam is an assembly worker earning $12 per hour for a basic 35-hour week. Any overtime is paid at a premium of 50%.
In the last 4-week period Sam was paid for 150 hours, during this time 15 hour were classed 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 4-week period?
why the ans is 15*12+(10-4)*6=$216
What about the charge of 15*140 and 4*6? It charges to direct labour expenses?
Yes – ‘normal’ hours and overtime worked at customers request are direct labour.
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