Predetermined Factory Overhead Rate Willies Engine Shop uses a job order cost sy

Question

Predetermined Factory Overhead Rate Willies 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 sal Administrative office depreciation expense $613,800 448,000 47,300 131,600 23,900 18,400 12,300 52,800 6,800 $1,354,900 The average shop direct labor rate is $16 per hour aries Total costs and expenses Determine the predetermined shop overhead rate per direct labor hour. Round the answer to nearest whole cent. per direct labor hour

Explanation / Answer

SOLUTION

Predetermined overhead rate = Total overhead / labor hour

= $221,200 / 28.000 = $7.9 per direct labor hour

Labor hour = 448,000 / 16 = 28,000 hours

Amount ($) Depreciation 47,300 Shop supervisor salaries 131,600 Shop property tax 23,900 Shop supplies 18,400 Total overhead 221,200

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