10014_022210_18 - Chapter 2 Appendix 2A & 2B IV. A. Labor...

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IV. A. Labor Costs 1. Idle time – cost of DL workers who can’t perform their job due to machine malfunction, material shortages, power failures, etc. Add to OH. Spread over production period rather than for 2 jobs when it happens Example: 34 hours works on customers jobs 6 hours idle time (snow storm) 40 hours paid for week x $15 hourly rate $600 gross pay for week On ledger: 34 hours x $15 = $510 (DL, WIP assigned to jobs) 6 hours x $15 = $90 (OH) $600 will be allocated over ALL jobs worked during month B. Overtime (OT) Premium: (1/2 part) Example: 45 hours worked in a week No idle time $14/hr Premium = $7 (because OT = ½ > 40 hrs/week 40 hours x $14= $560 5 hours x $21= $105 $665 Gross pay On ledger: 45 hours x $14= $630 WIP (DL) 5 hours x $7= $35 (OH) $665 C. Fringe Benefits: employment related costs Two ways to handle 1. Indirect labor – added to actual OH 2. DL – additional DL costs (conceptually superior)
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This note was uploaded on 08/25/2010 for the course ACCT 208 taught by Professor Kingery during the Spring '08 term at University of Delaware.

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10014_022210_18 - Chapter 2 Appendix 2A & 2B IV. A. Labor...

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