pcr june 06 q 1.1 e

taskey

confoosed about why the labour is charged at £6 normal hours and £6 for overtime.

The basic labour rate is £6 per hour and overtime is paid at a premium of 50% of this rate per hour.
any overtime premium is charged to production overheads rather than to the cost of direct labour.
overheads are charged to production at the rate of £10 per hour.

so would i calculate all overtime at £6 per hour for labour costs and the other £3 per hour (50%) as an overhead? making the the overhead £13 per hour?

Please help

Thanks

Tracy

karenv

Thats the way I read it too... but not the way the answer shows it.
Guessing game at times.

xamix

the overhead rate of £10 is the absorption rate, and the overtime premium is already included in the absorption rate as it is all based on the budget. So you dont add the overtime premium on top as it has already been absorbed..

thats how i understand it anyway, hope that makes sense...

taskey

i will have another look at it later today

thanks

tracy

mark130273

wow june 06 paper looks funky...dotn think i will pratice that one ?