Page 127 - F2 - MA Integrated Workbook STUDENT 2018-19

Accounting for labour

Test your understanding 2

HWI has two production departments, A and B. Workers in department A are
considered direct workers and workers in department B are considered
indirect workers.

In the last week department A worked 40 hours of overtime, 30 at the specific
request of a customer and the remaining at the request of management.
Department B worked 15 hours of overtime.

All the workers in department A are paid at a rate of $12 per hour and working
in department B are paid at a rate of $10 per hour. All overtime is paid at time
and a half.

Calculate the total overtime pay for the week, split between direct and indirect
cost.

$

Direct overtime cost

Indirect overtime cost

Total overtime cost

Illustrations and further practice

Now try TYU questions 3 and 4 from Chapter 6

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