EXERCISE 3B–1 Allocations of the Cost of Idle Time [LO9]
Chris Shannon is employed by Acme Company and is paid $18 per hour. Last week she worked 36 hours assembling one of the company’s products and was idle 4 hours due to material shortages. Acme’s employees are engaged at their workstations for a normal 40-hour week.
Allocate Ms. Shannon’s earnings for the week between direct labor and manufacturing overhead.