(SOLVED)- Direct and indirect labour manufacturer Sharpedge Cutlery manufactures kitchen knives


Question Description:

$20

Direct and indirect labour: manufacturer Sharpedge Cutlery manufactures kitchen knives. One of the employees. whose job is to cut out wooden knife handles, worked 49 hours during a week in January. The employee earns $21 per hour for a 40-hour week. For additional hours the employee is paid an overtime rate of $28.50 per hour. The employee’s time was spent as follows:
Regular duties involving cutting out knife handles………………..41 hours
General shop clean-up duties…………………………………………6 hours
Idle time due to power failure……………………………………….2 hours
Required:
1. Calculate the total cost of the employee’s wages during the week described.
2 Determine the portion of this cost to be classified in each of the following categories:
(a) Direct labour.
(b) Manufacturing overhead (idle time).
(c) Manufacturing overhead (overtime premium).
(d) Manufacturing overhead (indirect labour).
3 Under what circumstances would the normal wage of this employee be treated as an indirect cost?

Answer

$20