Pierpont 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 $700,000 520,000 Shop and repair equipment depreciation 38,000 Shop supervisor salaries 100,000 Shop property tax Shop supplies Advertising expense Administrative office salaries 18,000 13,000 14,240 60,000 Administrative office depreciation expense 8,000 Total costs and expenses $1,471,240 The average shop direct labor rate is $20 per hour. Determine the predetermined shop overhead rate per direct labor hour.

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter2: Job Order Costing
Section: Chapter Questions
Problem 10E: Exotic Engine Shop uses a job order cost system to determine the cost of performing engine repair...
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Pierpont 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
$700,000
520,000
Shop and repair equipment depreciation
38,000
Shop supervisor salaries
100,000
Shop property tax
Shop supplies
Advertising expense
Administrative office salaries
18,000
13,000
14,240
60,000
Administrative office depreciation expense 8,000
Total costs and expenses
$1,471,240
The average shop direct labor rate is $20 per hour.
Determine the predetermined shop overhead rate per direct labor hour.
Transcribed Image Text:Pierpont 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 $700,000 520,000 Shop and repair equipment depreciation 38,000 Shop supervisor salaries 100,000 Shop property tax Shop supplies Advertising expense Administrative office salaries 18,000 13,000 14,240 60,000 Administrative office depreciation expense 8,000 Total costs and expenses $1,471,240 The average shop direct labor rate is $20 per hour. Determine the predetermined shop overhead rate per direct labor hour.
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