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How you please assist me in calculating indirect and direct wages. When there is idle time and bonus scheme included. I am getting confuse.
Also how to calculate the Efficiency, Capacity and Production Ratios using examples.
Thanks
Basic pay (for all hours worked) is a direct cost.
If there is overtime, then the extra paid for those hours (above the basic pay) is an indirect cost, unless it is at the specific request of a customer in which case it is a direct cost.
Idle time and bonus payments are indirect costs.
You can find the labour ratios in Chapter 6 of our free Course Notes (and examples at the end of the chapter).
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