Study Notes management accounting acca f2

Guaranteed minimum Piecework: 
Guaranteed piecework system is where the employee is paid 
a guaranteed amount of minimum pay in case there is not enough work available for each 
employee. This help companies in retaining their workers. 

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F2 Management Accounting 
Page 25 of 147 
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Guaranteed wage system:
Where worker has a guaranteed wage with an additional pay per unit 
or per contract. For example, salesmen pay (salary plus commission). 
OVERTIME
 
AND
 
OVERTIME
 
PREMIUM
Overtime
usually arise from working more than normal working hours, including weekends and national 
holidays. 
Overtime premium
The additional / extra amount paid to the employee over the normal rate because he 
/ she worked for more than the normal period of time. Overtime payment is always more than normal 
hourly rate. There is 
two parts
of overtime payment; overtime 
basic pay and overtime premium
. 
Types of Overtime
➢
 
General Overtime: 
Extra hours worked due to general reasons like machine breakdown, production 
scheduling problem etc. 
➢
 
Specific Overtime: 
Overtime is done due to customer’s special request to complete his job earlier. 
Overtime
Specific Overtime 
General Overtime 
Direct Worker Indirect Worker
Indirect Worker 
Direct Worker 
At basic rate and at
At basic rate and at 
At basic rate is treated as
overtime premium rate
overtime premium rate 
direct and at overtime 
both are treated as
both are treated as
premium rate is treated
direct labour costs. 
Indirect labour costs. 
as indirect labour costs. 
✓