Question:
(Labor cost classification) Woodlands Restaurant Supply operates in two shifts, paying a late-shift premium of 10 percent and an overtime premium of 75 percent. The May 2010 payroll follows:
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Total wages for 6,000 hours
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$54,000
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Normal hourly employee wage
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$9
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Total regular hours worked, split evenly between the shifts
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5,000
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All overtime was worked by the early shift during May. Shift and overtime premiums are considered part of overhead rather than direct labor.
a. How many overtime hours were worked in May?
b. How much of the total labor cost should be charged to direct labor? To overhead?
c. What amount of overhead was for second-shift premiums? For overtime premiums?