Highlander Cutlery manufactures kitchen knives. One of the employees, whose job is to cut out wooden knife handles, worked 48 hours during a week in January. The employee earns $12 per hour for a 40-hour week, and overtime is paid after 40 hours. For additional hours, the employee is paid an overtime rate of $18 per hour. The employee’s time was spent as follows: Regular duties involving cutting out knife handles..................................38 hoursGeneral shop cleanup duties..............................................................................9 hoursIdle time due to power outage..........................................................................1 hour 2. Total cost of wages: $624 Required:1. Calculate the total cost of the employee’s wages during the week described above.2. Determine the portion of this cost to be classified in each of the following categories:a. Direct laborb. Manufacturing overhead (idle time)c. Manufacturing overhead (overtime premium)d. Manufacturing overhead (indirect labor)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Highlander Cutlery manufactures kitchen knives. One of the employees, whose job is to cut out wooden knife handles, worked 48 hours during a week in January. The employee earns $12 per hour for a 40-hour week, and overtime is paid after 40 hours. For additional hours, the employee is paid an overtime rate of $18 per hour. The employee’s time was spent as follows:

Regular duties involving cutting out knife handles..................................38 hours
General shop cleanup duties..............................................................................9 hours
Idle time due to power outage..........................................................................1 hour

2. Total cost of wages: $624

Required:
1. Calculate the total cost of the employee’s wages during the week described above.
2. Determine the portion of this cost to be classified in each of the following categories:
a. Direct labor
b. Manufacturing overhead (idle time)
c. Manufacturing overhead (overtime premium)
d. Manufacturing overhead (indirect labor)

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