Please give detailed explanations Thank youSolutionDirect la

Please give detailed explanations. Thank you.

Solution

Direct labor cost is the product of regular pay rate and actual hours utilized. Regular rate is given as $16 P.H and actual hours utilized is (hours worked – Idle time hours) = (50 – 4 =) 46.

Direct labor cost = Regular rate × Actual hours utilized

                            = $16 × 46

                            = $736

Manufacturing overhead is the aggregate of idle time pay and overtime pay. Here, the overtime hour is (Hours worked – hours per week) = (50 – 40 =) 10. Overtime pay is 1.5 times of regular pay; therefore, it is ($16 × 1.5 =) $24. Therefore, premium rate on overtime is ($24 - $16 =) $8.

Manufacturing overhead = Idle time pay + Overtime pay

                                          = (Idle hours × Regular pay rate) + (Overtime hours × Premium rate)

                                          = (4 × $16) + (10 × $8)

                                          = $64 + $80

                                          = $144

Answer: A