Mr.Foxhound works at a manufacturing plant that makes balloons for holiday parades.He earns $30 per hour for straight-time and $50 per hour for overtime.One week he worked 46 hours,which included 6 hours of overtime,and 4 hours of idle time caused by a shortage of materials to make the balloons.
Required:
Compute Mr.Foxhound's total compensation for the week;the amount of compensation reported as direct manufacturing labor;and the amount of compensation that would be reported as manufacturing overhead.
A)$1,200;$1,100;$220
B)$1,250;$1,200;$160
C)$1,500;$1,260;$240
D)$1,600;$1,280;$260
E)$1,750;$1,300;$280

Question

Quizplus · Accepted Answer

To calculate the total compensation for the week, we need to calculate both the straight-time pay and the overtime pay.

Straight-time pay = 40 hours x $30 per hour = $1,200
Overtime pay = 6 hours x $50 per hour = $300

Total compensation for the week = Straight-time pay + Overtime pay - Idle time pay
= $1,500 - $80 (4 hours of idle time at $20 per hour) = $1,420

To calculate the amount of compensation reported as direct manufacturing labor, we only consider the straight-time pay since idle time is not included in direct manufacturing labor costs.

Therefore, the amount of compensation reported as direct manufacturing labor = $1,260 (straight-time pay for 42 hours)

To calculate the amount of compensation that would be reported as manufacturing overhead, we subtract the direct manufacturing labor cost from the total compensation for the week.

Therefore, the amount of compensation that would be reported as manufacturing overhead = $1,420 - $1,260 = $240

MrFoxhound Works at a Manufacturing Plant That Makes Balloons for Holiday