how will you treat overtime wages in cost accounts
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Explanation:
) Overtime hours at the normal rate are treated as direct labour cost and charged to production on the same basis as time worked during normal hours but the premium paid during the overtime period is not a direct charge against production but is recovered as production overhead through overhead recovery rate.
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Treatment of Overtime Wages in Cost Accounts:
(1) Where due to general pressure of work overtime is caused, the payment made at normal rate should be debited to the job order or standing order number on which the worker has been employed & the premium should be debited to the overhead account of the department.
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