Question
Highlander Cutlery manufactures kitchen knives. One of the employees, whose job is to cut out wooden knife handles, worked 48 hours during a week in
Highlander Cutlery manufactures kitchen knives. One of the employees, whose job is to cut out wooden knife handles, worked 48 hours during a week in January. The employee earns $12 per hour for a 40-hour week. For additional hours, the employee is paid an overtime rate of $16 per hour. The employees time was spent as follows: Regular duties involving cutting out knife handles ......... 38 hours General shop cleanup duties ................ . 9 hours Idle time due to power outage ................. 1 hour Required: 1. Calculate the total cost of the employees wages during the week described above. 2. Determine the portion of this cost to be classified in each of the following categories: a. Direct labor b. Manufacturing overhead (idle time) c. Manufacturing overhead (overtime premium) d. Manufacturing overhead (indirect labor)
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