Labor cost, overtime, and idle time. Louie Anderson works in the production departme...

Labor cost, overtime, and idle time. Louie Anderson works in the production department of Southwest Plasticworks as a machine operator. Louie, a long-time employee of Southwest, is paid on an hourly basis at a rate of $20 per hour. Louie works five 8-hour shifts per week Monday–Friday (40 hours). Any time Louie works over and above these 40 hours is considered overtime for which he is paid at a rate of time and a half ($30 per hour). If the overtime falls on weekends, Louie is paid at a rate of double time ($40 per hour). Louie is also paid an additional $20 per hour for any holidays worked, even if it is part of his regular 40 hours. Louie is paid his regular wages even if the machines are down (not operating) due to regular machine maintenance, slow order periods, or unexpected mechanical problems. These hours are considered “idle time.”

During December Louie worked the following hours:

Included in the total hours worked are two company holidays (Christmas Eve and Christmas Day) during Week 4. All overtime worked by Louie was Monday–Friday, except for the hours worked in Week 3; all of the Week 3 overtime hours were worked on a Saturday.

1. Calculate (a) direct manufacturing labor, (b) idle time, (c) overtime and holiday premium, and (d) total earnings for Louie in December.

2. Is idle time and overtime premium a direct or indirect cost of the products that Louie worked on in December? Explain.