Direct Labour Cost per service - HELP

jane

Hi all

Please can someone help me.
I have just had to work out Bonus payable, Gross Pay, and overtime on a simulation. It is also asking me for Direct Labout Cost Per Service??????

If there were 25 services done in a month, what do I calculate?

Thank you in advance
Jane

Dipak Thanki

"Per" Just means "Divide"

So you would do Direct labour cost/25.

jane

So if the basic pay is £9 per hour I would calculate 25/£9 = £2.77 ?

Dipak Thanki

Don't think so, you need to divide the Direct Labour cost by 25.

If they asked you to work out it will say some where on the sheet.

It will say "Direct Labour cost" somewhere and then you would divide that by 25 to get Direct labour cost "per" service.

jane

My situation is this:-

4 Week period

bonus payable

Time Allowed 200
Time taken 191
Time saved 9

x hrly rate £14 x 9 = 126 (£14 is rate paid for time saved)
Bonus = £126

Gross Pay 185hrs x £9 =£1665.0
Overtime 15hrs x £13.50 = £202.50
Bonus = £126.00

Total pay = £1993.50

What is the direct labourcost per service?

Dipak Thanki

I have no clue, sorry I'm sure it's something divided by 25, usually when I've worked it out it's said "Direct labour cost" somewhere in the question and I've just picked it up!

Sorry.

SandyHood

Either the question (or you) have missed a vital point.
Does this company treat overtime premium as direct or as indirect labour cost?

4 Week period

bonus payable

Time Allowed 200
Time taken 191
Time saved 9

x hrly rate £14 x 9 = 126 (£14 is rate paid for time saved)
Bonus = £126

Gross Pay 185hrs x £9 =£1665.0
Overtime 15hrs x £13.50 = £202.50
Bonus = £126.00

Total pay = £1993.50

What is the direct labourcost per service?

In the absence of detail on the overtime premium, I have made the following assumptions:

1. This company includes all the hours spent on direct tasks as direct labour costs paid at £9.00
2. This company treats the overtime premium as indirect labour cost (charged to the production overhead account)
3. The bonus payable is treated as a direct labour cost

I might not have made the same assumptions as those made by the question writer but in the absence of such detail, you must make your own assumptions (which can be different from mine)

Total hours worked: 191
rate per hour orked: £9.00
Total hours worked £1,719
9hrs saved x £14/hr: £126
Total direct labour
cost: hours worked: £1,845

Now my question is: how many services were provided? Was it 25?

The direct labour cost per service is found by dividing the total direct labour cost (£1,845) by the number of services(25).

= £73.80 per service

jane

Hi Sandyhood

Many thanks for your reply, and it's probably me being a total el thicko!!! so to speak Lol.

The memo reads as follows:-

Structure of the bonus payments:-

A standard allowance of 8 hours per service

Any time saved by the employees will be paid at an enhanced rate of £14 per hour.

Employes work a std 5 day week of 37 hours and any overtime is paid at time and a half.

The normal hourl y rae is £9

The bonus is calculated on the services completed during the month.

Employee worked 191 hours during the month and completed 25 services.

From your help I have now calculated (from the previous figures given)
£1993.50/25 = £79.74
Hope thats correct.

Jane