Predetermined Factory Overhead Rate Exotic 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 Shop and repair equipment depreciation Shop supervisor salaries Shop property taxes Shop supplies $953,500 696,000 31,700 88,000 16,000 12,200 Advertising expense 19,100 Administrative office salaries 82,000 Administrative office depreciation expense 10,500 Total costs and expenses $1,909,000 The average shop direct labor rate is $24.00 per hour. Determine the predetermined shop overhead rate per direct labor hour. Round the answer to nearest whole 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
Exotic 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
Shop and repair equipment depreciation
Shop supervisor salaries
Shop property taxes
Shop supplies
$953,500
696,000
31,700
88,000
16,000
12,200
Advertising expense
19,100
Administrative office salaries
82,000
Administrative office depreciation expense
10,500
Total costs and expenses
$1,909,000
The average shop direct labor rate is $24.00 per hour.
Determine the predetermined shop overhead rate per
direct labor hour. Round the answer to nearest
whole cent.
$
per direct labor hour](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe8dbb38b-67db-4869-a2fb-b3f37c286b0c%2Fcb09396c-8797-4c9b-b8ee-3c1a3537fd84%2Fyb2bzbc_processed.jpeg&w=3840&q=75)
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