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How to calculate basic pay, overtime pay, bonus pay and direct/indirect wages?

Tom, Dick and Harry are operative workers working in a factory producing metal brackets. The basic hourly rate is US$6.00 and overtime rate is "time and a half'. The factory policy is to pay their workers on weekly basis. The factory normal working hours is 40.

In addition, a group bonus scheme is in operation where bonus will be paid on the time saved by the group. Time saved is shared among the group members in the proportion of actual hours worked by each worker. Bonus rate is US$3.00 per hour.

During Week 4 of September, the three worked in a team and their output was 300 units of metal brackets. The standard time allowed for each unit of metal brackets is 30 minutes. Actual hours paid to Tom, Dick and Harry were 42 hours, 44 hours and 40 hours respectively.

The normal hour worked during week 4 of September was 40 hours. Productive hours were 38 hours only, that is, there were 2 idle hours during that week due to machine breakdown.

a) Calculate the gross wages of each worker for Week 4. Show clearly the basic pay, overtime pay and bonus pay;
b) Using the answer in (a), analyze the total gross wages of the workers into Direct Wages and Indirect Wages;

Solution Summary

The basic pay, overtime pay, bonus pay and direct/indirect wages are examined.