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JerryJerry Letterman works in the production department of New YorkNew YorkPlastics

(NYPNYP) as a machine operator. JerryJerry, a long-time employee of NYPNYP, is paid on an hourly basis at a rate of $3030 per hour. JerryJerry works five 8-hour shifts per week Monday-Friday

(4040

hours). Any time

JerryJerry

works over and above these

4040

hours is considered overtime for which he is paid at a rate of time and a half

($4545

per hour). If the overtime falls on weekends,

JerryJerry

is paid at a rate of double time

($6060

per hour).

JerryJerry

is also paid an additional

$3030

per hour for any holidays worked, even if it is part of his regular

4040

hours.

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(Click the icon to view additional information and the hours.)Read the requirements

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.

Requirement 1. Calculate (a) direct manufacturing labor, (b) idle time, (c) overtime and holiday premium, and (d) total earnings for

JerryJerry

in December.

(a) First determine the formula, then enter the amounts to calculate total direct manufacturing labor cost. (Abbreviations used: mfg = manufacturing.)

	(	Total hours per week	-	Regular hourly rate	) x		=	Direct mfg labor costs
Week 1	(		-		) x		=
Week 2	(		-		) x		=
Week 3	(		-		) x		=
Week 4	(		-		) x		=

(b) Select the labels, then enter the amounts to calculate total idle time costs.

		x		=	Idle time costs
Week 1		x		=
Week 2		x		=
Week 3		x		=
Week 4		x		=

(c) Begin by determining the formula, then enter the amounts to calculate the total overtime and holiday premium costs. (For hours with a zero balance, make sure to enter "0" in the appropriate cell.)

		Total								Overtime
		overtime				Holiday				and holiday
	(	hours	x		) + (	hours	x		) =	premium
Week 1	(		x		) + (		x		) =
Week 2	(		x		) + (		x		) =
Week 3	(		x		) + (		x		) =
Week 4	(		x		) + (		x		) =

(d) Calculate the total earnings for

JerryJerry

in December.

During the month of December, Jerry Anderson had total gross earnings of $

.

Requirement 2. Is idle time and overtime premium a direct or indirect cost of the product that

JerryJerry

worked on in December? Explain.Idle time caused by regular machine maintenance, slow order periods, or unexpected mechanical problems is a(n)

direct

indirect

cost of the product because it

is

is not

related to a specific product.Overtime premium caused by the heavy overall volume of work is a(n)

direct

indirect

cost because it

is

is not

related to a particular job that happened to be worked on during the overtime hours. If, however, the overtime is the result of a demanding "rush job," the overtime premium is a(n)

direct

indirect

cost of that job

JerryJerry

is paid his regular wages even if the machines are down (not operating) due to regular machine maintenance, slow order periods, or unexpected mechanical problems. These hours are considered "idle time". During December

JerryJerry

worked the following hours:

	Hours worked including
	machine downtime	Machine downtime
Week 1	54	6.7
Week 2	42	3.8
Week 3	41	6.6
Week 4	50	2.7

Included in the total hours worked are two company holidays (Christmas Eve and Christmas Day) during Week 4. All overtime worked by

JerryJerry

wasMonday-Friday, except for the hours worked in Week 3; all of the Week 3 overtime hours were worked on a Saturday.

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