Wheeler\'s Bike Compay manufactures custom ra ng bic cles The company uses a job
ID: 2332042 • Letter: W
Question
Wheeler's Bike Compay manufactures custom ra ng bic cles The company uses a job order cost s stem to determine the cost of each bike Estimated costs and expenses for the coming year follow Bike parts Factory machinery depreciation Factory supervisor salaries Factory direct labor Factory supplies Factory property tax Advertising cost Administrative salaries 347,800 59,000 140,500 204,424 43.400 32,750 24,500 53,000 24,200 $929,574 Total expected costs Required: 1. Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $11.11 per hour. (Round your answer to 2 decimal places.) Overhead Rate per DL Hour 2. Determine the amount of applied overhead if 18,700 actual hours are worked in the upcoming year. (Round your intermediate calculations to 2 decimals. Round your final answer to the nearest whole dollar.)Explanation / Answer
Answers
These include indirect material, indirect labor, indirect factory expenses.
These do not include direct costs, and cost incurred that are not related to production process.
A
Factory Machine depreciation
$ 59,000.00
B
Factory Supervisory Salaries
$ 140,500.00
C
Factory Supplies
$ 43,400.00
D
Factory Property Tax
$ 32,750.00
E = A+B+C+D
Total Factory Overheads
$ 275,650.00
Costs
Reason for not including in "Overhead" calculation
Bike Parts
Direct material = Direct Cost
Factory Direct Labor
Direct Labor = Direct Cost
Administrative Cost
Not related to production process
Administrative salaries
Not related to production process
Administrative related Depreciation
Not related to production process
---We now know (after Working 1) that what is the amount of total factory overheads. Now we have to calculate overhead rate ‘per direct labor hour’. For that we need to know and calculate total no. of direct labor hour.
A
Factory Direct Labor [given]
$ 204,424.00
B
Direct Labor rate [Mentioned in Requirement 1]
$ 11.11 per hour
C = A/B
Total No. of direct labor hours
18,400 direct labor hour
A
Total Factory Overheads [see working 1]
$ 275,650.00
B
Total No. of direct labor hours [see Working 2]
18,400
C = A/B
Predetermined Overhead rate per direct labor hour
$ 14.98
A
Actual hours worked
18,700
B [calculated in requirement 1]
Predetermined Overhead rate per direct labor hour
$ 14.98
C = A x B
Applied Overhead
$ 280,126.00
A
Factory Machine depreciation
$ 59,000.00
B
Factory Supervisory Salaries
$ 140,500.00
C
Factory Supplies
$ 43,400.00
D
Factory Property Tax
$ 32,750.00
E = A+B+C+D
Total Factory Overheads
$ 275,650.00
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