e. What amount of overneld ws prod ucts. The firm operates 24 hours per day with

Question

e. What amount of overneld ws prod ucts. The firm operates 24 hours per day with three daily work shifts. The workers receive "regular pay." The second shift receives an 8 percent pay and the third shift receives a 12 percent pay premium. In addition, whenpro scheduled on weekends, the firm pays an overtime premium of 50 percent (bas the pay rate for first shift employees). Labor premiums are included in overhe October 2013 factory payroll is as follows: 29. LO.5 (Labor cost classification) Tidy House produces a variety of houschold tion on $435,600 Total wages for October for 32,000 hours Normal hourly wage for first-shift employees Total regular hours worked, split evenly among the three shifts $12 27,000 a. How many overtime hours were worked in October b. How much of the total labor cost should be charged to direct labor? To overhead? c. What amount of overhead was for second- and third-shift premiums? For overtim premiums?

Explanation / Answer

a.No of hours overtime worked = 32,000 - 27,000 = 5,000 hours

b.Normal Wages for 32,000 hours = 32,000 * $12 = $384,000

Extra wages incurred = $435,600 - $ 384,000 = $51,600

Cost charged to Direct Labor = $384,000

Cost charged to Overheads= $51,600

c. Second shift premium = $12 * 8% = $0.96

Third shift premium = $12 * 12% = $1.44

Overtime Premium = $12 * 50% = $6

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