- July 26, 2018 at 6:27 pm
During the month of June the following labour hours were worked.
Direct production workers – 1,700 basic hours plus 250 hours of overtime
Indirect workers – 760 hours including 90 hours of overtime
The direct workers are paid a basic rate of $8.00 per hour and the indirect workers $7.60 per hour. Overtime hours are paid at time and a half. The overtime premium for direct labour is classed as an indirect cost. Of the hours paid to the direct production workers 80 of these were idle time hours.
What is the indirect labour cost for the month?
How do i calculate overtime cost for direct labour and indirect labour?July 27, 2018 at 9:38 am
Overtime cost of direct labour is 250 x 8 x 1.5
Overtime cost of inditrct labour is 90 x 7.6 x 1.5July 27, 2018 at 12:33 pm
I extracted this question form a bpp kit in which the answer calculated overtime cost of direct labour at $0.5. (250 x 8 x 0.5= 1000)July 29, 2018 at 1:49 pm
Well, it depends on what BPP is trying to ask.
If they want the cost of overtime, then that is what I showed above. Of the $3,000 total cost of overtime, $2,000 ie the overtime at normal rate is a regarded as a driect cost, whilst the overtime premium amount of $1,000 is regarded as an indirect cost.
See page 65 of our notes.
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