Predetermined Factory Overhead Rate Spring Street Engine Shop uses a job order c
ID: 2539754 • Letter: P
Question
Predetermined Factory Overhead Rate Spring Street Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows Engine parts Shop direct labor Shop and repair equipment depreciation Shop supervisor salaries Shop property tax Shop supplies Advertising expense Administrative office salaries Administrative office depreciation expense $945,300 690,000 79,700 221,700 40,200 31,000 18,900 81,300 10,400 $2,118,500 Total costs and expenses The average shop direct labor rate is $15 per hour Determine the predetermined shop overhead rate per direct labor hour. Round the answer to nearest whole cent. per direct labor hourExplanation / Answer
Average shop direct labour hour rate (A)
$15
Shop direct labour cost (B)
$690,000
No of labour hours (C=B/A)
46,000
Factory overhead costs:
Shop and repair equipment depreciation
$79,700
Shop supervisor salaries
$221,700
Shop property taxes
$40,200
Shop supplies
$31,000
Total Factory overhead costs (D)
$372,600
Ans
Predetermined labour overhead rate (E=D/C)
8.10
Average shop direct labour hour rate (A)
$15
Shop direct labour cost (B)
$690,000
No of labour hours (C=B/A)
46,000
Factory overhead costs:
Shop and repair equipment depreciation
$79,700
Shop supervisor salaries
$221,700
Shop property taxes
$40,200
Shop supplies
$31,000
Total Factory overhead costs (D)
$372,600
Ans
Predetermined labour overhead rate (E=D/C)
8.10
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