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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.

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 4EA: Hicks Contracting collects and analyzes cost data in order to track the cost of installing decks on...
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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:

  1. Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $12.31 per hour.
  2. Determine the amount of applied overhead if 19,200 actual hours are worked in the upcoming year.
 
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