Help with Labour

System

For some reason i dont seem to understand labour & know there is only one question on most of the exams!!!

I dont have a very clear handout of labour!!!

Could anyone help me with a few workings on labour e.g idle time/overtime

Thanks!!!!

System

Re:Help with Labour

Are you asking re overtime payments etc. If so this is how I understand it. Normal worked hours are considered to be direct costs so 10 hours labour at £5.00 is £50.00 direct labour costs, but the overtime premium unless otherwise stated is usually an indirect cost so if 5 hours overtime is worked at time and a half this would be

5 hours x £5.00 = £25.00 direct cost
5 hours x £2.50 = £12.50 indirect cost

Total overtime would be £37.50

Total cost would be £87.50 (37.50 + £50.00)

If you were posting them in the accounts then I think £75.00 would be posted to direct labour costs and £12.50 would be posted to overheads, as overheads are indirect costs.

If the machines are idle because they have broken down etc then this is also charged to overheads as indirect labour costs

Hope my maths is right !!!!