P2-12 Allocating Labor Costs (Appendix 2A) Lynn Bjorland is employed by Southern Laboratories, Inc., and is directly involved in preparing the company's leading an- tibiotic drug. Lynn's basic wage rate is $12 per hour. The company pays its employees time and a half for any work in excess of 40 hours per week. 1. Suppose that in a given week Lynn works 45 hours. Compute Lynn's total wages for the week. How much of this cost would the company allocate to direct labor cost? To man- ufacturing overhead cost? 2. Suppose in another week that Lynn works 50 hours but is idle for 4 hours during the week due to equipment breakdowns. Compute Lynn's total wages for the week. How much of this amount would be allocated to direct labor cost? To manufacturing overhead cost? 3. Southern Laboratories has an attractive package of fringe benefits that costs the company $4 for each hour of employee time (either regular time or overtime). During a particular week, Lynn works 48 hours but is idle for 3 hours due to material shortages. Compute Lynn's total wages and fringe benefits for the week. If the company treats all fringe benefits as part of manufacturing overhead cost, how much of Lynn's wages and fringe benefits for the week would be allocated to direct labor cost? To manufacturing overhead cost? Cost Terms, Concepts, and Classifications 73 4. Refer to the data in (3) above. If the company treats that part of fringe benefits relating to direct labor as added direct labor cost, how much of Lynn's wages and fringe benefits for the week will be allocated to direct labor cost? To manufacturing overhead cost?