Mark Hansen is employed by Eastern Products, Inc., and works on the company’s assembly line. Mark’s basic wage rate is $20 per hour. The company’s union contract states that employees are to be paid time and a half (i.e., $30 per hour) for any work in excess of 40 hours per week.

Required: 

1. Suppose that in a given week Mark works 46 hours. Compute Mark’s total wages for the week. How much of this amount would be allocated to direct labor cost? To manufacturing overhead cost?

2. Suppose in another week that Mark works 48 hours but is idle for 3 hours during the week due to machine breakdowns. Compute Mark’s total wages for the week. How much of this amount would be allocated to direct labor cost? To manufacturing overhead cost?

3. Eastern Products, Inc., has an attractive package of fringe benefits that costs the company $6 for each hour of employee time (either regular time or overtime). During a particular week, Mark works 50 hours but is idle for 2 hours due to material shortages. Compute Mark’s total wages and fringe benefits for the week. If the company treats all fringe benefits as part of manufacturing overhead cost, how much of Mark’s wages and friend benefits for the week would be allocated to direct labor cost? To manufacturing overhead cost?

4. Refer to the data in (3) above. If the company treats that part of fringe benefits relating to direct labor as added direct labor cost, how much of Mark’s wages and fringe for the week will be allocated to direct labor cost? To manufacturing overhead cost?