The Engine Shop uses a job order cost system to determine the costof performing
ID: 2433717 • Letter: T
Question
The Engine Shop uses a job order cost system to determine the costof performing engine repair work. Estimated costs and expenses forthe coming period are as follows:Engineparts $650,750
Shop directlabor 520,625
Shop and repair equip.depreciation 12,800
Shop supervisorsalaries 93,125
Shop propertytax 22,300
Shopsupplies 12,650
Advertisingexpense 18,100
Advertising officesalaries 61,600
Administrative office depreciationexp. 8,050
Total costs andexpenses $1,400,000
The average shop direct labor rate is $17 per hour.
Determine the predetermined shop overhead rate per direct laborhour.
Explanation / Answer
Shop overheads Shop & Repair equipmentdepreciation $12,800 Shop SupervisorsSalary $93,125 Shop Propertytax $22,300 ShopSupplies $12,650 Advertising officeSalaries $61,600 Administrative officedepreciationexpenses $ 8,050 Missing Item Or mistake in otherfigures $ 19,475 ***See note below ______________ Total Shopoverheads $230,000 ============= ***Note: 1,400,000 - (650,000+ 520,000 + 12,800 + 93,125 + 22,300 + 12,650 + 61,600 +8,050 ) 1,400,000 - 1,380,525 = $19,475 Predetermined Shop OverheadRate = Total ShopOverhead / Direct Laborhours = $230,000 / 30,588 ****Seecalculation below = $7.519 per DLH ****Direct laborhours = Direct Labor Cost /Direct labor cost per hour = $520,000 / $17 = 30,5888DLHRelated Questions
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