Jerome Anderson works in the production department of Midcity Steelworks as a machine operator. Jerome, a long- time employee of Midcity, is paid on an hourly basis at a rate of $ 40 per hour. Jerome works five 8- hour shifts per week Monday– Friday (40 hours). Any time Jerome works over and above these 40 hours is considered overtime for which he is paid at a rate of time and a half ($ 60 per hour). If the overtime falls on weekends, Jerome is paid at a rate of double time ($ 80 per hour). Jerome is also paid double time for any holidays worked, even if it is part of his regular 40 hours.

Jerome 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, Jerome worked the following hours:

Included in the total hours worked above are two company holidays (Christmas Eve and Christmas Day) during Week 4. All overtime worked by Jerome was Monday– Friday, except for the hours worked in Week 3. All of the Week 3 overtime hours were worked on a Saturday.

Required
1. Calculate
(a) Direct manufacturing labor,
(b) Idle time,
(c) Overtime and holiday premium, and
(d) Total earnings for Jerome in December.
2. Is idle time and overtime premium a direct or indirect cost of the products that Jerome worked on in December?Explain.

Transcribed Image Text:

Week 1 Week 2 Week 3 Week 4 Hours Worked Including Machine Downtime 48 46 54 51 Machine Downtime 3.9 6.6 6.1 2.8