Chapter 2, Problem 44P

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:

Required:

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