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Victory Manufacturing Company produces a variety of products
Victory Manufacturing Company produces a variety of products. The firm operates 24 hours per day with three daily work shifts. The 1st shift workers receive regular pay. The 2nd shifts receive 10% pay premium, the 3rd shifts receive 20% pay premium. In addition, the firm pays overtime premium of 50% based on the pay rate for for the 1st shifts. All labor premiums are included in the overhead. The actual payroll for the month is as follows:
Total wages for 16,000 hours ?
Wage rate per hour for the 1st shift 35
Total regular hours worked 15,000.00
1. How much is the total payroll?
2. How much is charged to direct labor?
3. How much is charged to the overhead as overtime pay?
4. How much is charged to the overhead as premium pay of the 2nd shift?
5. How much is charged to the overhead as premium pay of the 3rd shift?
Expert Solution
Answer:
Total payroll cost-
First shift pay per hour-35
Second shift pay per hour at 10 percent premium - (35+10%of35)= 38.5
Third shift pay per hour at 20 percent premium-
(35+10%of35)=42
Assuming equal hours in all the three shifts 15000 regular hours/3=5000
Total labour cost- 5000*35+5000*38.5+5000*42=5,77,500
And 1000 Overtime hours pay with rate of 17.5 as 50 percent of first shift- 1000*17.5= 17500 ( overtime pay answer of 3)
Total payroll cost =
5,77,500+17500= 5,95,000
Overtime in second shift=5000 hour*3.5=17,500
Overtime in third shift=5000 hour*7=35,000
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