Question

Sally is employed by a Paper towel manufacturer. Sally packages the paper towels. During one week, she worked 45 hours, as follows:

Packaging paper towels 42 hours

                     Idle time 3 hours

Sally is paid $10 per hour, but for time worked in excess of 40 hours per week, she is paid time-and-a-half. The amount of Sally’s wages to be classified as factory overhead is $ __________

Answer 1

Answer:

Calculation of amount to be charged to factory overhead is:

No of hours worked = 45 hours

idle time = 3 hours

Now pay per hour:

For hours worked in excess of 40 , she is paid time and a half,

=45 hours - 40 hours= 5 hours

payment for that 5 hours shall be 5 + 2.5 = 7.5 hours

wages calculation = 10 per hour x ( 40 + 7.5)hours

= 475 $ wages

Generally idle time is included in indirect labour hence it also forms part of the factory overheads.

-------------------------------------------------------------------------------------------------------------------