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What amount of the above labour costs would be charged to the work-in-progress a

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › What amount of the above labour costs would be charged to the work-in-progress a

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.
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  • September 18, 2019 at 6:55 pm #546643
    yuu809
    Member
    • Topics: 2
    • Replies: 1
    • ☆

    Labour costs for a period in the production cost center P1 include: (jan-june 2019)

    Gross wages of direct operatives:
    Normal hours $76,200
    Overtime hours (at a premium of 50% over the normal rate) $9,600

    Gross wages of indirect operatives:
    Normal hours $14,300
    Overtime hours (at a premium of 50% over the normal rate) $1,650

    Overtime is worked, due to the request of the customer.

    (im stuck with finding the premium to add to the direct cost)

    September 19, 2019 at 5:30 pm #546706
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51909
    • ☆☆☆☆☆

    If the premium is 50% over the normal cost, then for every $100 normal cost the premium is $50 and the full amount is $150.

    Therefore the premium is 50/150 of the amount paid.

    So the premium for the overtime hours of the direct operatives is 50/150 x $9,600 = $3,200.

    The premium for the indirect operatives is not relevant, because all payments to indirect operatives is an indirect cost.

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