Novus 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 $767,200 Shop direct labor 560,000 Shop and repair equipment depreciation 68,500 Shop supervisor salaries 190,400 A Shop property taxs 34,600 Shop supplies 26,500 Advertising expense 15,300 Administrative office salaries 66,000 Administrative office depreciation expense ৪,৭00 Total costs and expenses $1,736,900 The average shop direct labor rate is $14 per hour. Determine the predetermined shop overhead rate per direct labor hour. Round your answer to the nearest cent. per direct labor hour
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
![Predetermined Factory Overhead Rate
Novus 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
$767,200
Shop direct labor
560,000
Shop and repair equipment depreciation
68,500
Shop supervisor salaries
190,400 -
Shop property taxs
34,600
Shop supplies
26,500
Advertising expense
15,300
. Administrative office salaries
66,000
Administrative office depreciation expense
8,400
Total costs and expenses
$1,736,900
The average shop direct labor rate is $14 per hour.
Determine the predetermined shop overhead rate per direct labor hour. Round your answer to the nearest cent.
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per direct labor hour](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4c3089e0-0bd8-43ff-a6c4-f13ae35e6505%2Fb3c86cb8-e652-44f3-9958-717d71d50b89%2Fgd6jlca_processed.jpeg&w=3840&q=75)
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