XZZ Ltd operates 50 weeks in a year. it has 10 direct workers and 15 indirect workers. Both type of workers work 6 hours a day and 5 days a week. Direct workers and indirect workers are paid at the rate of $10 per hour and $8 per hour respectively. Overtime hours are paid at the rate of time and a half. in week 8, Direct workers worked 350 hours and indirect workers worked 500 hours. any overtime in week 8 was due to customer's request.
Calculate the direct cost for XYZ Ltd. for week 8?
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MAManagement accounting direct and indiect labour questions
For week 8,
Direct workers basic pay=( 6*5*10)*10= 300*10=3000
Direct workers overtime worked= 350-300=50 hours
Direct workers overtime payment=50*10*1.5=750
Indirect workers overtime worked= 500-(15*6*5)=50 hours
Indirect workers overtime payment= 50*8*1.5=600
So, total direct cost of labour= 3000+750+600= 4350 ( bcz overtime worked is on a customer's request)
1.5 is equvalent to time and a half or 150%.
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