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A company has a basic wage rate of N8 per hour. Evening overtime is paid at time plus 1/3, and weekend overtime is paid at double time. Calculate the labor cost for jobs X, Y, and Z under different ov

Accounting

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Step-by-step solution

3 steps

First, let's determine the basic and overtime rates.
Basic wage rate = N8 per hour
Evening overtime rate (Time plus 13\frac{1}{3}) = 8×(1+13)=8×43=323 N per hour8 \times (1 + \frac{1}{3}) = 8 \times \frac{4}{3} = \frac{32}{3} \text{ N per hour}
Weekend overtime rate (Double time) = 8×2=16 N per hour8 \times 2 = 16 \text{ N per hour}

The hours worked for each job are:

JobNormal Time (hrs)Evening Overtime (hrs)Weekend Overtime (hrs)
X6,000600200
Y10,0001,200100
Z8,0002,100600

Part a· 2 steps

Where overtime is worked regularly throughout the year as company policy due to labour shortage.

In this circumstance, the overtime premium is treated as an overhead cost, not directly charged to the job. Only the basic rate for all hours worked is charged to the job.

  1. Calculate the total hours worked for each job.

    • Job X: 6,000+600+200=6,8006,000 + 600 + 200 = 6,800 hours
    • Job Y: 10,000+1,200+100=11,30010,000 + 1,200 + 100 = 11,300 hours
    • Job Z: 8,000+2,100+600=10,7008,000 + 2,100 + 600 = 10,700 hours

  2. Calculate the labour cost for each job by multiplying total hours by the basic rate.

    • For Job X:
    Labour Cost=6,800 hours×8 N/hour=N54,400\text{Labour Cost} = 6,800 \text{ hours} \times 8 \text{ N/hour} = \boxed{\text{N}54,400}
    • For Job Y:
    Labour Cost=11,300 hours×8 N/hour=N90,400\text{Labour Cost} = 11,300 \text{ hours} \times 8 \text{ N/hour} = \boxed{\text{N}90,400}
    • For Job Z:
    Labour Cost=10,700 hours×8 N/hour=N85,600\text{Labour Cost} = 10,700 \text{ hours} \times 8 \text{ N/hour} = \boxed{\text{N}85,600}

Part b· 1 step

Where Overtime is worked specifically at the customer's request to expedite delivery.

In this circumstance, the entire cost of overtime (basic rate plus premium) is directly charged to the specific job.

  1. Calculate the cost for normal time, evening overtime, and weekend overtime for each job using their respective rates.

    • For Job X: Normal time cost = 6,000 hours×8 N/hour=48,000 N6,000 \text{ hours} \times 8 \text{ N/hour} = 48,000 \text{ N} Evening overtime cost = 600 hours×323 N/hour=6,400 N600 \text{ hours} \times \frac{32}{3} \text{ N/hour} = 6,400 \text{ N} Weekend overtime cost = 200 hours×16 N/hour=3,200 N200 \text{ hours} \times 16 \text{ N/hour} = 3,200 \text{ N} Total labour cost for Job X = $48,000 + 6,400 + 3,200 = \boxed{N57,600
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