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Appendix 3B - Further Classification of Labor Costs

LO9: Labor costs (App 3B)

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Question Type T&( T&( Conceptual M/C Conceptual M/C %&$ %&$ %&$ %ultipart %&$ %ultipart %&$ Proble Proble Proble Proble Proble

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Ori#in Aut-ors E010 Authors David e!es Aut-ors Aut-ors Da4i! 5eyes E010 E010 Larry Deppe E010 E010 E010 E010

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3B-1

Appendix 3B - Further Classification of Labor Costs

Appendix 3B Further Classification of Labor Costs


True / False Questions

1. The overtime premium paid to factory or!ers is usually considered to be part of direct labor cost. True False

". #ome companies classify labor frin$e benefits for direct labor or!ers as part of the direct labor cost and some classify these costs as manufacturin$ overhead. True False

Multiple Choice Questions

3. %f schedulin$ delays occur& and a particular 'ob must be or!ed on durin$ an overtime period& the overtime premium cost ould most li!ely be char$ed to( A. the 'ob or!ed on durin$ the overtime period. B. manufacturin$ overhead. C. finished $oods inventory. ). or! in process.

*. The overtime premium paid to or!ers is usually included as a part of( A. sellin$ cost. B. direct labor cost. C. administrative cost. ). manufacturin$ overhead cost.

3B-"

Appendix 3B - Further Classification of Labor Costs

+. #ally #mith is employed in the production of various electronic products& and earns ,- per hour. #he is paid time-and-a-half for or! in excess of *. hours per ee!. )urin$ a $iven ee! she or!ed *+ hours and had no idle time. /o much of her ee!0s a$es ould be char$ed to manufacturin$ overhead1 A. ,2. B. ,". C. ,*. ). ,.

2. 3ames Andersen& an operator of a machine on the assembly line& receives time-and-a-half for any time or!ed in excess of *. hours per ee!. /is rate of pay is ,1" per hour. /o much should be char$ed to manufacturin$ overhead if he or!ed *2 hours last ee! and had no idle time1 A. ,. B. ,4" C. ,32 ). ,1.-

4. An assembly line or!er is paid ,". per hour and an extra ,1. per hour for every hour over *. that is or!ed in a $iven ee!. %f this or!er or!s ** hours in a $iven ee!& ho much of her a$e should be included in manufacturin$ overhead cost1 A. ,. B. ,*. C. ,-. ). ,1".

5endy or!s on the assembly line of a manufacturin$ company here she installs a component part for one of the company0s products. #he is paid ,". per hour for re$ular time and time and a half for all or! in excess of *. hours per ee!.

3B-3

Appendix 3B - Further Classification of Labor Costs

-. 5endy or!s *+ hours durin$ a ee! in hich there as no idle time. The allocation of 5endy0s a$es for the ee! bet een direct labor cost and manufacturin$ overhead cost ould be(

A. 6ption A B. 6ption B C. 6ption C ). 6ption )

7. 5endy or!s *2 hours in a $iven ee! but is idle for * hours durin$ the ee! due to e8uipment brea!do ns. The allocation of 5endy0s a$es for the ee! bet een direct labor cost and manufacturin$ overhead cost ould be(

A. 6ption A B. 6ption B C. 6ption C ). 6ption )

3B-*

Appendix 3B - Further Classification of Labor Costs

1.. 5endy0s employer offers frin$e benefits that cost the company ,3 for each hour of employee time 9both re$ular and overtime:. )urin$ a $iven ee!& 5endy or!s *" hours but is idle for 3 hours due to material shorta$es. The company treats all frin$e benefits as part of manufacturin$ overhead. The allocation of 5endy0s a$es and frin$e benefits for the ee! bet een direct labor cost and manufacturin$ overhead ould be(

A. 6ption A B. 6ption B C. 6ption C ). 6ption )

11. 5endy0s employer offers frin$e benefits that cost the company ,3 for each hour of employee time 9both re$ular and overtime:. )urin$ a $iven ee!& 5endy or!s *" hours but is idle for 3 hours due to material shorta$es. The company treats all frin$e benefits relatin$ to direct labor as added direct labor cost and the remainder as part of manufacturin$ overhead. The allocation of 5endy0s a$es and frin$e benefits for the ee! bet een direct labor cost and manufacturin$ overhead ould be(

A. 6ption A B. 6ption B C. 6ption C ). 6ption )

Chuc! is a 8uality inspector on the assembly line of a manufacturin$ company. /e is paid ,12 per hour for re$ular time and time and a half for all or! in excess of *. hours per ee!. /e is classified as a direct labor or!er.

3B-+

Appendix 3B - Further Classification of Labor Costs

1". Chuc! or!s *" hours durin$ a ee! in hich there as no idle time. The allocation of Chuc!0s a$es for the ee! bet een direct labor cost and manufacturin$ overhead cost ould be(

A. 6ption A B. 6ption B C. 6ption C ). 6ption )

13. Chuc! or!s *4 hours in a $iven ee! but is idle for 3 hours durin$ the ee! due to e8uipment brea!do ns. The allocation of Chuc!0s a$es for the ee! bet een direct labor cost and manufacturin$ overhead cost ould be(

A. 6ption A B. 6ption B C. 6ption C ). 6ption )

3B-2

Appendix 3B - Further Classification of Labor Costs

1*. Chuc!0s employer offers frin$e benefits that cost the company ,+ for each hour of employee time 9both re$ular and overtime:. )urin$ a $iven ee!& Chuc! or!s *+ hours but is idle for " hours due to material shorta$es. The company treats all frin$e benefits as part of manufacturin$ overhead. The allocation of Chuc!0s a$es and frin$e benefits for the ee! bet een direct labor cost and manufacturin$ overhead ould be(

A. 6ption A B. 6ption B C. 6ption C ). 6ption )

1+. Chuc!0s employer offers frin$e benefits that cost the company ,+ for each hour of employee time 9both re$ular and overtime:. )urin$ a $iven ee!& Chuc! or!s *+ hours but is idle for " hours due to material shorta$es. The company treats all frin$e benefits relatin$ to direct labor as added direct labor cost and the remainder as part of manufacturin$ overhead. The allocation of Chuc!0s a$es and frin$e benefits for the ee! bet een direct labor cost and manufacturin$ overhead ould be(

A. 6ption A B. 6ption B C. 6ption C ). 6ption )

Essay Questions

3B-4

Appendix 3B - Further Classification of Labor Costs

12. Broo!e Foster is employed by 5on$ Laboratories& %nc.& and is directly involved in preparin$ and pac!a$in$ the company0s leadin$ sleep aid& ;est5ell. Broo!e0s basic a$e rate is ,1+ per hour& and she is paid time and a half for any or! in excess of *. hours per ee!. Additionally& 5on$ Laboratories provides a frin$e benefit pac!a$e that costs the company ,+ for each hour of employee time 9re$ular or overtime:. )urin$ a recent ee!& Broo!e or!ed *7 hours but as idle for 3 hours due to materials shorta$es. ;e8uired( a. Assume that 5on$ Laboratories treats all frin$e benefits as part of manufacturin$ overhead. Compute Broo!e0s total a$es and frin$e benefits for the ee! and indicate ho much of her a$es and frin$e benefits for the ee! ould be allocated to direct labor and ho much ould be allocated to manufacturin$ overhead. b. Assume that 5on$ Laboratories treats the part of frin$e benefits related to direct labor as a component of direct labor cost. Compute Broo!e0s total a$es and frin$e benefits for the ee! and indicate ho much of her a$es and frin$e benefits ould be allocated to direct labor and ho much ould be allocated to manufacturin$ overhead.

14. A direct labor or!er at <erdin$ Corporation is paid ,12 per hour for re$ular time and time and a half for all or! in excess of *. hours per ee!. This employee or!s *+ hours durin$ a ee! in hich there as no idle time. ;e8uired( )etermine ho much of the or!er0s a$es for the ee! ould be classified as direct labor cost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

3B--

Appendix 3B - Further Classification of Labor Costs

1-. A direct labor or!er at )amann Corporation is paid ,"* per hour for re$ular time and time and a half for all or! in excess of *. hours per ee!. This employee or!s *- hours in a $iven ee! but is idle for 3 hours durin$ the ee! due to e8uipment brea!do ns. ;e8uired( )etermine ho much of the or!er0s a$es for the ee! ould be classified as direct labor cost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

17. A direct labor or!er at Co$s ell Corporation is paid ,"" per hour for re$ular time and time and a half for all or! in excess of *. hours per ee!. The company0s frin$e benefits cost ,4 for each hour of employee time 9both re$ular and overtime:. Last ee! this employee or!ed *3 hours but as idle for 3 hours due to material shorta$es. The company treats all frin$e benefits relatin$ to direct labor as added direct labor cost and the remainder as part of manufacturin$ overhead. ;e8uired( )etermine ho much of the or!er0s a$es for the ee! ould be classified as direct labor cost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

3B-7

Appendix 3B - Further Classification of Labor Costs

".. A direct labor or!er at Bla$$ Corporation is paid ,1* per hour for re$ular time and time and a half for all or! in excess of *. hours per ee!. The company0s frin$e benefits cost ,* for each hour of employee time 9both re$ular and overtime:. Last ee! this employee or!ed *+ hours but as idle for " hours due to material shorta$es. The company treats all frin$e benefits as part of manufacturin$ overhead. ;e8uired( )etermine ho much of the or!er0s a$es for the ee! ould be classified as direct labor cost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

3B-1.

Appendix 3B - Further Classification of Labor Costs

Appendix 3B Further Classification of Labor Costs Ans er =ey

True / False Questions

1. The overtime premium paid to factory or!ers is usually considered to be part of direct labor cost. FALSE

AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: no!le"ge #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: 0as/

3B-11

Appendix 3B - Further Classification of Labor Costs

". #ome companies classify labor frin$e benefits for direct labor or!ers as part of the direct labor cost and some classify these costs as manufacturin$ overhead. T !E

AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: no!le"ge #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: 0as/

Multiple Choice Questions

3. %f schedulin$ delays occur& and a particular 'ob must be or!ed on durin$ an overtime period& the overtime premium cost ould most li!ely be char$ed to( A. the 'ob or!ed on durin$ the overtime period. B" manufacturin$ overhead. C. finished $oods inventory. ). or! in process.

AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: no!le"ge #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: 0as/

3B-1"

Appendix 3B - Further Classification of Labor Costs

*. The overtime premium paid to or!ers is usually included as a part of( A. sellin$ cost. B. direct labor cost. C. administrative cost. #" manufacturin$ overhead cost.

AACSB: Reflective Thinking AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: Com,rehension #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

+. #ally #mith is employed in the production of various electronic products& and earns ,- per hour. #he is paid time-and-a-half for or! in excess of *. hours per ee!. )urin$ a $iven ee! she or!ed *+ hours and had no idle time. /o much of her ee!0s a$es ould be char$ed to manufacturin$ overhead1 A. ,2. B" ,". C. ,*. ). ,. >anufacturin$ overhead for overtime premium ? + hours ..+ ,- per hour ? ,".

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

3B-13

Appendix 3B - Further Classification of Labor Costs

2. 3ames Andersen& an operator of a machine on the assembly line& receives time-and-a-half for any time or!ed in excess of *. hours per ee!. /is rate of pay is ,1" per hour. /o much should be char$ed to manufacturin$ overhead if he or!ed *2 hours last ee! and had no idle time1 A. ,. B. ,4" C" ,32 ). ,1.>anufacturin$ overhead for overtime premium ? 2 hours ..+ ,1" per hour ?,32

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

4. An assembly line or!er is paid ,". per hour and an extra ,1. per hour for every hour over *. that is or!ed in a $iven ee!. %f this or!er or!s ** hours in a $iven ee!& ho much of her a$e should be included in manufacturin$ overhead cost1 A. ,. B" ,*. C. ,-. ). ,1". >anufacturin$ overhead for overtime premium ? * hours ..+ ,". per hour ? ,*.

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

5endy or!s on the assembly line of a manufacturin$ company here she installs a component part for one of the company0s products. #he is paid ,". per hour for re$ular time and time and a half for all or! in excess of *. hours per ee!.

3B-1*

Appendix 3B - Further Classification of Labor Costs

-. 5endy or!s *+ hours durin$ a ee! in hich there as no idle time. The allocation of 5endy0s a$es for the ee! bet een direct labor cost and manufacturin$ overhead cost ould be(

A. 6ption A B. 6ption B C. 6ption C #" 6ption ) )irect labor ? *+ hours ,". per hour ? ,7.. >anufacturin$ overhead for overtime premium ? + hours ..+ ,". per hour ? ,+.

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

3B-1+

Appendix 3B - Further Classification of Labor Costs

7. 5endy or!s *2 hours in a $iven ee! but is idle for * hours durin$ the ee! due to e8uipment brea!do ns. The allocation of 5endy0s a$es for the ee! bet een direct labor cost and manufacturin$ overhead cost ould be(

A. 6ption A B" 6ption B C. 6ption C ). 6ption )

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

3B-12

Appendix 3B - Further Classification of Labor Costs

1.. 5endy0s employer offers frin$e benefits that cost the company ,3 for each hour of employee time 9both re$ular and overtime:. )urin$ a $iven ee!& 5endy or!s *" hours but is idle for 3 hours due to material shorta$es. The company treats all frin$e benefits as part of manufacturin$ overhead. The allocation of 5endy0s a$es and frin$e benefits for the ee! bet een direct labor cost and manufacturin$ overhead ould be(

A. 6ption A B" 6ption B C. 6ption C ). 6ption )

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

3B-14

Appendix 3B - Further Classification of Labor Costs

11. 5endy0s employer offers frin$e benefits that cost the company ,3 for each hour of employee time 9both re$ular and overtime:. )urin$ a $iven ee!& 5endy or!s *" hours but is idle for 3 hours due to material shorta$es. The company treats all frin$e benefits relatin$ to direct labor as added direct labor cost and the remainder as part of manufacturin$ overhead. The allocation of 5endy0s a$es and frin$e benefits for the ee! bet een direct labor cost and manufacturin$ overhead ould be(

A. 6ption A B. 6ption B C" 6ption C ). 6ption )

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

Chuc! is a 8uality inspector on the assembly line of a manufacturin$ company. /e is paid ,12 per hour for re$ular time and time and a half for all or! in excess of *. hours per ee!. /e is classified as a direct labor or!er.

3B-1-

Appendix 3B - Further Classification of Labor Costs

1". Chuc! or!s *" hours durin$ a ee! in hich there as no idle time. The allocation of Chuc!0s a$es for the ee! bet een direct labor cost and manufacturin$ overhead cost ould be(

A. 6ption A B. 6ption B C" 6ption C ). 6ption ) )irect labor ? *" hours ,12 per hour ? ,24" >anufacturin$ overhead for overtime ? " hours ..+ ,12 per hour ? ,12

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

3B-17

Appendix 3B - Further Classification of Labor Costs

13. Chuc! or!s *4 hours in a $iven ee! but is idle for 3 hours durin$ the ee! due to e8uipment brea!do ns. The allocation of Chuc!0s a$es for the ee! bet een direct labor cost and manufacturin$ overhead cost ould be(

A. 6ption A B. 6ption B C. 6ption C #" 6ption )

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

3B-".

Appendix 3B - Further Classification of Labor Costs

1*. Chuc!0s employer offers frin$e benefits that cost the company ,+ for each hour of employee time 9both re$ular and overtime:. )urin$ a $iven ee!& Chuc! or!s *+ hours but is idle for " hours due to material shorta$es. The company treats all frin$e benefits as part of manufacturin$ overhead. The allocation of Chuc!0s a$es and frin$e benefits for the ee! bet een direct labor cost and manufacturin$ overhead ould be(

A" 6ption A B. 6ption B C. 6ption C ). 6ption )

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

3B-"1

Appendix 3B - Further Classification of Labor Costs

1+. Chuc!0s employer offers frin$e benefits that cost the company ,+ for each hour of employee time 9both re$ular and overtime:. )urin$ a $iven ee!& Chuc! or!s *+ hours but is idle for " hours due to material shorta$es. The company treats all frin$e benefits relatin$ to direct labor as added direct labor cost and the remainder as part of manufacturin$ overhead. The allocation of Chuc!0s a$es and frin$e benefits for the ee! bet een direct labor cost and manufacturin$ overhead ould be(

A" 6ption A B. 6ption B C. 6ption C ). 6ption )

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

Essay Questions

3B-""

Appendix 3B - Further Classification of Labor Costs

12. Broo!e Foster is employed by 5on$ Laboratories& %nc.& and is directly involved in preparin$ and pac!a$in$ the company0s leadin$ sleep aid& ;est5ell. Broo!e0s basic a$e rate is ,1+ per hour& and she is paid time and a half for any or! in excess of *. hours per ee!. Additionally& 5on$ Laboratories provides a frin$e benefit pac!a$e that costs the company ,+ for each hour of employee time 9re$ular or overtime:. )urin$ a recent ee!& Broo!e or!ed *7 hours but as idle for 3 hours due to materials shorta$es. ;e8uired( a. Assume that 5on$ Laboratories treats all frin$e benefits as part of manufacturin$ overhead. Compute Broo!e0s total a$es and frin$e benefits for the ee! and indicate ho much of her a$es and frin$e benefits for the ee! ould be allocated to direct labor and ho much ould be allocated to manufacturin$ overhead. b. Assume that 5on$ Laboratories treats the part of frin$e benefits related to direct labor as a component of direct labor cost. Compute Broo!e0s total a$es and frin$e benefits for the ee! and indicate ho much of her a$es and frin$e benefits ould be allocated to direct labor and ho much ould be allocated to manufacturin$ overhead. a.

b. Total a$es and frin$e benefits ould be ,1&.*4.+. as sho n above.

3B-"3

Appendix 3B - Further Classification of Labor Costs


AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: 1ar"

14. A direct labor or!er at <erdin$ Corporation is paid ,12 per hour for re$ular time and time and a half for all or! in excess of *. hours per ee!. This employee or!s *+ hours durin$ a ee! in hich there as no idle time. ;e8uired( )etermine ho much of the or!er0s a$es for the ee! ould be classified as direct labor cost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: 0as/

3B-"*

Appendix 3B - Further Classification of Labor Costs

1-. A direct labor or!er at )amann Corporation is paid ,"* per hour for re$ular time and time and a half for all or! in excess of *. hours per ee!. This employee or!s *- hours in a $iven ee! but is idle for 3 hours durin$ the ee! due to e8uipment brea!do ns. ;e8uired( )etermine ho much of the or!er0s a$es for the ee! ould be classified as direct labor cost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: 0as/

3B-"+

Appendix 3B - Further Classification of Labor Costs

17. A direct labor or!er at Co$s ell Corporation is paid ,"" per hour for re$ular time and time and a half for all or! in excess of *. hours per ee!. The company0s frin$e benefits cost ,4 for each hour of employee time 9both re$ular and overtime:. Last ee! this employee or!ed *3 hours but as idle for 3 hours due to material shorta$es. The company treats all frin$e benefits relatin$ to direct labor as added direct labor cost and the remainder as part of manufacturin$ overhead. ;e8uired( )etermine ho much of the or!er0s a$es for the ee! ould be classified as direct labor cost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

3B-"2

Appendix 3B - Further Classification of Labor Costs

".. A direct labor or!er at Bla$$ Corporation is paid ,1* per hour for re$ular time and time and a half for all or! in excess of *. hours per ee!. The company0s frin$e benefits cost ,* for each hour of employee time 9both re$ular and overtime:. Last ee! this employee or!ed *+ hours but as idle for " hours due to material shorta$es. The company treats all frin$e benefits as part of manufacturin$ overhead. ;e8uired( )etermine ho much of the or!er0s a$es for the ee! ould be classified as direct labor cost and ho much ould be classified as manufacturin$ overhead cost. #ho your or!.

AACSB: Anal/tic AICPA BB: Critical Thinking AICPA FN: Measurement Bloom's: A,,lication #earning $%&ective: '()'* +A,,en"i- (B. Pro,erl/ account for la%or costs associate" !ith i"le time an" fringe %enefits overtime #evel: Me"ium

3B-"4