The Electric Wiring Company employs staff to repair electrical equipment in customers homes under maintenance contracts. Each
Question:
The Electric Wiring Company employs staff to repair electrical equipment in customers’ homes under maintenance contracts. Each job of work is the cost unit for which costs are recorded and monitored. Explain which of the following will be direct labour costs and which will be indirect labour costs for each cost unit:
(a) The hourly rate payable to an employee technician for hours worked on repairing electrical equipment for customers under maintenance contracts.
(b) The hourly rate payable to a cleaner who works in cleaning the head office premises.
(c) The annual salary paid to a supervisor who allocates work to technicians carrying out repair work for customers, and who also checks the quality of the completed work.
(d) The monthly allowance paid to technician employees for being available ‘on call’ for emergency repairs.
Step by Step Answer: