Ex19-10 of Warren, Reeve and Duchac I need help finding the predetermined shop o

Question

Ex19-10 of Warren, Reeve and Duchac I need help finding the predetermined shop overhead rate per direct labor hour. The question looks like this. Engine Parts $650,750 Shop Direct Labor 520,000 Shop and repair equipment depreciation 12,800 Shop Supervisor salaries 93,125 Shop property tax 22,300 Shop supplies 12,650 Advertising expense 18,100 Administrative office salaries 61,600 Administrative office depreciation expense 8,050 Total costs and expenses 1,400,000 If the average shop direct labor rate is $17 per hour, what is the predetermined shop overhead rate per labor hour

Explanation / Answer

Overhead: 12,800 shop and repair depreciation 93,125 shop supervisor salaries 22,300 shop property tax 12,650 shop supplies =140,875 total overhead direct labor hours: $520,000/$17 per hour = 30588.24 Overhead rate per hour: $140,875/30588.24 = $40.6055 per direct labor hour answer: $40.61 per direct labor hour rounded

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