What is the differnt betwen overtime premium and idle cost

Expert Solution



S. No	Particulars	Idle Cost	Overtime Premium
1	Meaning	Idle Cost is related to Idle time that is the Unproductive time on the part of employees or Machines caused by Management or as a results of factors beyond their control	The Additional amount given to employees for the overtime hours. The overtime hours is the time over and above the normal working hours
2	Treatment	The Cost associated with idle time is treated as Indirect Labor Cost and should, therefore be included in Manufacuring overhead cost	Like Idle Cost, Overtime premium is also treated as Indirect Labor cost and included in Manufacuring Overhead Cost.
3	Example	Normal Working Hous=48 Hours @ 8 Per Hour. If he remains idle for 6 Hours due to power failure, then the cost of 42 Hours would be treated as Direct labor cost and cost of 6 Hours is Idle Time would be treated as Indirect Labor Cost and included in MOH Cost	Normal Working Hous=48 Hours @ 8 Per Hour. In a particular week, if he works for 52 Hours and company pays him 12 for every hour in excess of 48 hours. So in this case DL is 528= 416 and 44 is the Overtime Premium

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