3. Labour Costs (not complete)

Question 1

Labour payment methods are:

Answer 1

Time rate
Piecework rate
Bonus system - time rate plus bonus based on % of time saved.

Question 2

How are overtime and bonus payments handled

Answer 2

…charged to indirect labour rather than direct labour

Unless customer requested rush job … then charged to direct labour and cost passed to customer.

Question 3

Idle time and time spent training?

Answer 3

Normally charged to overheads as indirect labour.

Question 4

Prime cost is ?

Answer 4

Direct materials
Direct Labour
Direct expenses

= Total direct costs (or ‘Prime cost’)

Question 5

Overheads are ?

Answer 5

Indirect materials
Indirect labour
Indirect expenses
= Total indirect costs (or ‘Overheads)

Question 6

Direct labour cost is wages to those who work on production line, assembly or involved in output of a service biz

Answer 6

.

Question 7

Normally charge ‘overtime premium’ (only the extra amount on top of basic rate) to indirect labour

Answer 7

Unless customer requested.

Question 8

Idle time amount (eg piecework employee gets time rate if machine breaks down)

Usually charged to overheads as indirect labour

Answer 8

Same with things like time off production line at a training course … normally indirect labour charged to production overheads