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Managerial Accounting Calculation Question
Hi I am confused on this and need help with steps :
Assume that press operator earns $12 an hour. She is paid time and a half for overtime (time excess of 40 hrs per week). During a given week she works 45 hrs and has no idle time. The text shows labor cost allocated as follows : Direct Labor ($12/hr x 45 hrs) = 540 Manufacturing Overhead ($6/hr x 5 hrs ) = $30 Total Cost for Week = $570 BUT they also say : Observe from this computation that only overtime premium of $6 / hr charged to overhead account, not entire $18 earned for each hr of overtime work ($12 regular rate x 1.5 hrs = $18). MY QUESTION : Where is the 1.5 coming from? |
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1.5 is the overtime rate, so take $12 an hour times 1.5 times 5 hours to get your overtime amount plus $12 an hour times 40 hours, which equals your regular pay to get your total pay for one employee.
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