Determine the portion of this cost to be classied in each of the following categories.Estimate the values of X1, X2, X3, X4 and X5. i.Direct laborX1Manufacturing overhead (idle time)Manufacturing overhead (overtime premium) X3iv. Manufacturing overhead (indirect labor)Total cost of wagesii.X2ii.Х4v.X5 Q7. Highlander Cutlery manufactures kitchen knives. One of the employees, whose jobis to cut out wooden knife handles, worked 53 hours during a week in January.The employee earns $16 per hour for a 40-hour week, and overtime is paid after 40hours. For additional hours the employee is paid an overtime rate of $21 per hour.The employee's time was spent as follows:Regular duties involving cutting out knife handlesGeneral shop cleanup dutiesIdle time due to power outage45 hours5 hours3 hours

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Answered: i. Direct labor X1 Manufacturing…

i. Direct labor X1 Manufacturing overhead (idle time) iii. Manufacturing overhead (overtime premium) X3 iv. Manufacturing overhead (indirect labor) Total cost of wages ii. X2 Х4 v. X5

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Determine the portion of this cost to be classied in each of the following categories.
Estimate the values of X1, X2, X3, X4 and X5.

i.
Direct labor
X1
Manufacturing overhead (idle time)
Manufacturing overhead (overtime premium) X3
iv. Manufacturing overhead (indirect labor)
Total cost of wages
ii.
X2
ii.
Х4
v.
X5

Q7. Highlander Cutlery manufactures kitchen knives. One of the employees, whose job
is to cut out wooden knife handles, worked 53 hours during a week in January.
The employee earns $16 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 $21 per hour.
The employee's time was spent as follows:
Regular duties involving cutting out knife handles
General shop cleanup duties
Idle time due to power outage
45 hours
5 hours
3 hours

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