Andy worked 57 hours last week for Bread Works Manufacturing. Of the 57 hours 8 hours were considered overtime, and also Tony was idle for 10 of the 57 hours due to an equipment malfunction. Andy makes $ 90 per hour and is paid $ 135 an hour (time and a half) for overtime. Andy's total compensation for that week would be , and assuming Bread Works charges overtime premium and idle time to indirect labor, the amount of this compensation credited to indirect labor would be . A. $ 5 comma 490; $ 1 comma 260 B. $ 4 comma 590; $ 2 comma 430 C. $ 5 comma 895; $ 1 comma 980 D. $ 5 comma 130; $ 1 comma 620

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andromache andromache · Answer 1 · 2019-10-04T08:13:56+02:00

Answer:

A. $ 5 comma 490; $ 1 comma 260

Explanation:

The computation of the compensation and the indirect labor is shown below:

Compensation = (Normal hours × wage rate per hour) + (overtime hours × overtime wage rate per hour)

= (49 hours × $90) + (8 hours × $135)

= $4,410 + $1,080

= $5,490

Since total hours is 57 hours out of which 9 hours are considered as overtime, so the remaining hours i.e 49 hours will be considered normal hours

Indirect labor = (Idle hours × wage rate per hour) + (overtime hours × wage rate per hour)

= (10 hours × $90) + (8 hours × $45)

= $900 + $360

= $1,260

The $45 rate is computed by

= Overtime rate per hour - normal wage rate per hour

= $135 - $90

= $45