Predetermined Factory Overhead RateRoad Runner Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expensesfor the coming period are as follows:Engine parts$1,085,000Shop direct labor792,000Shop and repair equipment depreciation31,100Shop supervisor salaries86,400Shop property taxes15,700Shop supplies12,000Advertising expense21,700Administrative office salaries93,300Administrative office depreciation expense11,900Total costs and expenses$2,149,100The average shop direct labor rate is $24 per hour.Determine the predetermined shop overhead rate per direct labor hour. Round the answer to nearest whole cent.$4per direct labor hour

Shop direct labor =$792,000 Shop and repair equipment depreciation =$31,100 Shop supervisor…

Answered: Determine the predetermined shop…

Determine the predetermined shop overhead rate per direct labor hour. Round the answer to nearest whole cent. per direct labor hour

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Predetermined Factory Overhead Rate
Road Runner 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
$1,085,000
Shop direct labor
792,000
Shop and repair equipment depreciation
31,100
Shop supervisor salaries
86,400
Shop property taxes
15,700
Shop supplies
12,000
Advertising expense
21,700
Administrative office salaries
93,300
Administrative office depreciation expense
11,900
Total costs and expenses
$2,149,100
The average shop direct labor rate is $24 per hour.
Determine the predetermined shop overhead rate per direct labor hour. Round the answer to nearest whole cent.
$4
per direct labor hour

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