ACCA MA · Chapter 5 · Question 4 of 10
Direct workers worked overtime at a customer's specific request so that the customer's job could be finished early. How should the overtime premium be treated?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) As a direct cost of that customer's job
Explanation
Overtime premium is normally a production overhead, because it usually arises from the general workload and it would be unfair to charge it to whichever job happened to be done during overtime. When overtime is worked at a specific customer's request, the premium is caused by that job, so it is charged to it as a direct cost.
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