Direct and indirect labour: manufacturer Sharpedge Cutlery manufactures kitchen knives. One of the employees. whose job is to cut out wooden knife handles, worked 49 hours during a week in January. The employee earns $21 per hour for a 40-hour week. For additional hours the employee is paid an overtime rate of $28.50 per hour. The employee's time was spent as follows:

Regular duties involving cutting out knife handles....................41 hours

General shop clean-up duties................................................6 hours

Idle time due to power failure..............................................2 hours

Required:

1. Calculate the total cost of the employee's wages during the week described.

2 Determine the portion of this cost to be classified in each of the following categories:

(a) Direct labour.

(b) Manufacturing overhead (idle time).

(c) Manufacturing overhead (overtime premium).

(d) Manufacturing overhead (indirect labour).

3 Under what circumstances would the normal wage of this employee be treated as an indirect cost?