PCR June 2005

fairycake

I'm confused by task 1.1e cost of labour budget. Has anyone else done this paper?

This should be easy but I disagree with the answer!

The question says "any overtime premium is charged to fixed overheads"

And then for the answer they include the overtime premium in the cost of labour budget... why? I thought we just charged the hours at standard rate to cost of labour in these cases.

for a total of 11500 hours, 1000 of which were overtime, with standard rate being £8 and overtime premium £4

AAT's answer (11500*8)+(1000*4) = 96000

but I thought it should be (11500*8) = 92000

Can anyone tell me why I am wrong? I bet I'm missing something really obvious!