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Highlander Cutlery manufactures kitchen knives. One of the employees, whose job is to cut out wooden knife handles, worked 45 hours during a week in
Highlander Cutlery manufactures kitchen knives. One of the employees, whose job is to cut out wooden knife handles, worked 45 hours during a week in January. The employee earns $12 per hour for a 40-hour week, and overtime is paid after 40 hours. For additional hours, the employee is paid an overtime rate of $18 per hour. The employees time was spent as follows:
Regular duties involving cutting out knife handles | 37 | hours |
General shop cleanup duties | 4 | hours |
Idle time due to power outage | 4 | hours |
2. Determine the portion of this cost to be classified in each of the following categories:
. | Direct labor | |
b. | Manufacturing overhead (idle time) | |
c. | Manufacturing overhead (overtime premium) | |
d. | Manufacturing overhead (indirect labor) | |
Total cost of wages |
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