Question:
1. Labor cost overtime and idle time. Len Lippart is a line worker in the assembly department of Maxart Manufacturing. He normally earns $12 per hour, but gets time and a halt ($18 per hour) for overtime, over 40 hours per week. He earns double time if he works holidays even if he has not worked 40 hours that week. Sometimes the assembly line equipment goes down and Len has to wait for the mechanics to repair the equipment or there is a scheduling mix-up. Len is paid for this time and Maxart considers this idle time.
In May, Len worked two 42 hour weeks, one 43 hour week, and the last week he worked 40 hours, but one of those days was Memorial Day (holiday). During regular hours, the assembly line equipment was down 4.2 hours in May, and Len had one hour of idle time because of a scheduling mix-up.
1. Calculate (a) direct manufacturing labor, (b) idle time, (c) overtime holiday premium, and (d) total earnings for Lenin May.
2. Is idle time and overtime premium a direct or indirect cost of the jobs that Len worked on in May? Explain.