E2-5 (Algo) Calculating Predetermined Overhead Rate and Applied Overhead [LO 2-3] Wheeler’s Bike Company manufactures custom racing bicycles. The company uses a job order cost system to determine the cost of each bike. Estimated costs and expenses for the coming year follow: Bike parts $ 341,800 Factory machinery depreciation 54,000 Factory supervisor salaries 140,000 Factory direct labor 235,121 Factory supplies 44,400 Factory property tax 25,250 Advertising cost 27,000 Administrative salaries 48,000 Administrative-related depreciation 19,200 Total expected costs $ 934,771 Required: Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $12.31 per hour. Determine the amount of applied overhead if 19,200 actual hours are worked in the upcoming year.
E2-5 (Algo) Calculating Predetermined Overhead Rate and Applied Overhead [LO 2-3] Wheeler’s Bike Company manufactures custom racing bicycles. The company uses a job order cost system to determine the cost of each bike. Estimated costs and expenses for the coming year follow: Bike parts $ 341,800 Factory machinery depreciation 54,000 Factory supervisor salaries 140,000 Factory direct labor 235,121 Factory supplies 44,400 Factory property tax 25,250 Advertising cost 27,000 Administrative salaries 48,000 Administrative-related depreciation 19,200 Total expected costs $ 934,771 Required: Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $12.31 per hour. Determine the amount of applied overhead if 19,200 actual hours are worked in the upcoming year.
Chapter4: Job Order Costing
Section: Chapter Questions
Problem 2PA: York Company Is a machine shop that estimated overhead will be $50,000, consisting of 5,000 hours of...
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Question
E2-5 (Algo) Calculating Predetermined Overhead Rate and Applied Overhead [LO 2-3]
Wheeler’s Bike Company manufactures custom racing bicycles. The company uses a job order cost system to determine the cost of each bike. Estimated costs and expenses for the coming year follow:
| Bike parts | $ 341,800 |
|---|---|
| Factory machinery depreciation | 54,000 |
| Factory supervisor salaries | 140,000 |
| Factory direct labor | 235,121 |
| Factory supplies | 44,400 |
| Factory property tax | 25,250 |
| Advertising cost | 27,000 |
| Administrative salaries | 48,000 |
| Administrative-related depreciation | 19,200 |
| Total expected costs | $ 934,771 |
Required:
- Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $12.31 per hour.
- Determine the amount of applied overhead if 19,200 actual hours are worked in the upcoming year.
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