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Premium calculation and indirect cost calculation

DKdang khoa2y ago
1. "The following data relate to work in the finishing department of certain factory: Normal working day 7 hours Basic rate of pay per hour $5 Standard time allowed to produce 1 unit 4 minutes Premium bonus payable at the basic rate 60% of time saved On a particular day one employee finishes 180 units. What is his gross pay for the day?" 2. "Employee A is a carpenter and normally works 36 hours per week. The standard rate of pay is $ 3.60 per hour. A premium of 50% of the basic hourly rate is paid for all overtime hours worked. During the last week of October, Employee A worked for 42 hours. The overtime hours worked were for the following reasons: Machine breakdowns: 4 Hours To complete a special job at the request of a customer: 2 hours How much of employee A’s earnings for the last week of October would have been treated as direct wages?" Hello tutor, 1. I have a question relating to the wording of 2 above exercises on PREMIUM pay. In the first exercise, the actual working time is 12 hours, therefore 5 hours saved. And the employee got paid for PREMIUM BONUS of 60%* 5 hours saved * 5$ = 15$ (only premium rate). But in the second exercise, in calculating the OT, in addition to the basic pay, they also include premium rate for those OT hours, so the OT PREMIUM : 2 hours * 3,6 $ (basic rate and premium rate) = 7,2$. How can we know in which case we calculate the premium according to the first method and which case we use the second method? 2. For the 2nd exercise, the four hours of machine breakdown is idle time, cannot be traced, so it's classified as indirect cost. So in this case what should be the amount of indirect cost? My solution: 4 hours* 5,4$ (basic rate and premium rate) = 21,60$. OR it can be: 4 hours * 1,8$ (only premium rate) = 7,2$. I am not sure which is the correct answer in this indirect cost calculation. Can you please help? Thank you tutor!
John MoffatJohn MoffatTutor2y ago#1
1. In both questions they specify how the premium is to be calculated. There is no 'standard' way and it always means following the instructions in the question. 2. It is the first of your two solutions. (Is that not how the answer has calculated it?)
DKdang khoa2y ago#2
Thank you tutor for your reply. For your 2nd question, they did not provide the solution on how to calculate the indirect cost, but just mentioned that the cost incurred in the idle time is indirect cost.
John MoffatJohn MoffatTutor2y ago#3
It should be as your first solution i.e. $21.60
DKdang khoa2y ago#4
Thank you tutor for your help :)
John MoffatJohn MoffatTutor2y ago#5
You are welcome
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