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    A manufacturing firm has temporary production problems and overtime is being worked. The amount of overtime premium contained in direct wages would normally be classed as: A B part of prime cost factory overheads C D direct Labour Costs administrative overheads. A company employs 20 direct production operatives and 10 indirect staff in its manufacturing department. The normal operating hours for all employees is 38 hours per week and all staff are paid $5 per hour. Overtime hours are paid at the basic rate plus 50%.

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    A manufacturing firm has temporary production problems and overtime is being worked. The amount of overtime premium contained in direct wages would normally be classed as: A B part of prime cost factory overheads C D direct Labour Costs administrative overheads. A company employs 20 direct production operatives and 10 indirect staff in its manufacturing department. The normal operating hours for all employees is 38 hours per week and all staff are paid $5 per hour. Overtime hours are paid at the basic rate plus 50%.

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    4K views2 pages

    ACCA F2 Labour Costs A

    Uploaded by

    tracyghl2011
    A manufacturing firm has temporary production problems and overtime is being worked. The amount of overtime premium contained in direct wages would normally be classed as: A B part of prime cost factory overheads C D direct Labour Costs administrative overheads. A company employs 20 direct production operatives and 10 indirect staff in its manufacturing department. The normal operating hours for all employees is 38 hours per week and all staff are paid $5 per hour. Overtime hours are paid at the basic rate plus 50%.

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    of 2

    ACCA F2 Management Accounting

    Q9: A manufacturing firm has temporary production problems and overtime is being worked.

    The amount of overtime premium contained in direct wages would normally be classed
    as which one of the following:

    A Direct expenses C Direct labour costs

    B Production overheads D Administrative overheads

    Q10: A manufacturing firm is very busy and overtime is being worked.

    The amount of overtime premium contained in direct wages would normally be classed
    as:

    A part of prime cost C direct labour costs

    B factory overheads D administrative overheads

    Q11: A company employs 20 direct production operatives and 10 indirect staff in its manufacturing
    department. The normal operating hours for all employees is 38 hours per week and all staff are
    paid $5 per hour. Overtime hours are paid at the basic rate plus 50%. During a particular week
    all employees worked for 44 hours.

    What amount would be charged to production overhead?

    A $2,650 C $450

    B $2,350 D $300

    Direct worker Indirect worker


    NT (20 x 38 x 5.00) 3,800 (10 x 38 x 5.00) 1,900
    OT: Basic (20 x 6 x 5.00) 600 (10 x 6 x 5.00) 300
    OT: Premium (20 x 6 x 2.50) 300 (10 x 6 x 2.50) 150

    Total OH: 300 + 1,900 + 300 + 150 = 2,650

    Q12: Gross wages incurred in department 1 in June were $54,000. The wages analysis shows the
    following summary breakdown of the gross pay:

    Paid to direct labour Paid to indirect labour


    $ $
    Ordinary time 25,185 11,900
    Overtime
    • Basic pay 5,440 3,500
    • Premium 1,360 875
    Shift allowance 2,700 1,360
    Sick pay 1,380 300
    36,065 17,935

    What is the direct wages cost for department 1 in June?


    A $25,185 C $34,685

    B $30,625 D $36,065

    Paid to direct labour Paid to indirect labour


    $ $
    Ordinary time 25,185 11,900

    Labour Costs -1-


    ACCA F2 Management Accounting

    Overtime
    • Basic pay 5,440 3,500
    • Premium 1,360 875
    Shift allowance 2,700 1,360
    Sick pay 1,380 300
    36,065 17,935

    Total direct labour cost = 25,185 + 5,440 = 30,625

    Q13: Employee A is a carpenter and normally works 36 hours per week. The standard rate of pay is
    $3.60 per hour. A premium of 50% of the basic hourly rate is paid for all overtime hours worked.
    During the last week of October, Employee A worked for 42 hours. The overtime hours worked
    were for the following reasons:

    Machine breakdown: 4 hours


    To complete a special job at the request of a customer: 2 hours

    How much of Employee A’s earnings for the last week of October would have been
    treated as direct wages?

    A $162.00 C $140.40

    B $129.60 D $151.20

    DLC IDLC
    NT (36 x 3.60) 129.60
    OT: Basic (4 x 3.60)/ (2 x 3.60) 14.40 7.20
    OT: Premium (4 x 1.80)/ (2 x 1.80) 7.20 3.60
    151.20 10.80
    Total direct wages: 151.20 + 10.80 = 162.00

    Labour Costs -2-

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