A loom operator in a textile factory earns $30 per hour, and $35 for each overtime hour, The operate worked 48 hours during the first week of May, instead of the normal working time of 38 hours.
1. Calculate the loom operator’s total wages for the week.
2. Calculate the operator’s total overtime premium for the week.
3. How much of the operator’s total wages for the week is direct labour costs? How much is overhead? Explain why?
4. Under what circumstances would the normal hourly rate be treated as an indirect labour cost?