Answered: Two grades of direct labour workers are…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter3: Accounting For Labor

Section: Chapter Questions

Problem 3P

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Two grades of direct labour workers are employed to produce units of Product WXYZ. There are 40 Grade 1 employees and 20 Grade 2 employees. All employees work a basic week of 40 hours. Grade 1 employees are paid GHC10 per hour and Grade 2 employees are paid GHC15 per hour. If employees work any overtime, they are paid at time-and-one-third (a premium of one third over the basic rate). There are also five 'support staff', such as maintenance engineers who are paid GHC12 per hour for a basic 40 hour week. During week 52, the Grade 1 employees and support workers each worked 40 hours and the Grade 2 employees worked 46 hours. Due to difficulties with some equipment, 250 hours of Grade 1 labour and 100 hours of Grade 2 labour were recorded as idle time in the week. During week 52, 4000 units of Product WXYZ were manufactured. Required: (a) Calculate the direct labour cost and the indirect labour costs in Week 52. (b) Calculate the direct labour cost per unit of Product WXYZ in Week 52

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