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BSA Homes produces a variety of household products. The ?rm operates 24 hours per day with three daily work shifts. The ?rst-shift workers receive "regular pay." The second shift receives an 8 percent pay premium, and the third shift receives a 12 percent pay premium. In addition, when production is scheduled on weekends, the ?rm pays an overtime premium of 50 percent (based on the pay rate for ?rst-shift employees). Labor premiums are included in overhead. The October 2019 factory payroll is as follows:
Total wages for October for 32,000 hours P435,600
Normal hourly wage for first-shift employees P12
Total regular hours worked, split evenly among the three shifts 27,000
Answer the following:
Question 1. How much of the total labor cost should be charged to direct labor?
Question 2. How much of the total labor cost should be charged to overhead?
Question 3. Calculate the breakdown of overhead cost as to:
a. Second shift premiums
b. Third shift premiums
c. Overtime premiums
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