(Direct labor variances; advanced) Many companies face the prospect of pay¬ ing workers overtime wages; some of these payments are at time-and-a-half wages.

a. How does overtime pay affect direct labor cost? Variable overhead?

b. Obviously, paying overtime to already employed workers makes better financial business sense than does hiring additional workers. If workers would prefer not to work overtime but do so to maintain their jobs, how does overtime affect the ethical contract between employers and employees?

c. What effects might overtime have on job efficiency? On job effectiveness (such as quality of production)?

d. Would you be in favor of limiting allowable hours of overtime to have more individuals employed? Discuss this question from the standpoint of (1) the government, (2) the employer, (3) a currently employed worker, and (4) an unemployed individual.

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