CA Inter P4 · Chapter 3 · Question 7 of 11
Overtime premium paid because a customer asked for urgent completion of his particular order should be:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Charged directly to that customer's job
Explanation
When overtime is worked at the specific request of a customer, the premium is caused by that job and is charged directly to it. Overtime premium arising from general pressure of work is treated as production overhead, while premium due to abnormal causes (such as a breakdown) goes to the Costing Profit and Loss Account.
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