Spring Street Engine Shop uses a job order cost system to determine t follows: t

Question

Spring Street Engine Shop uses a job order cost system to determine t follows: the cost of performing engine repair work. Estimated costs and expenses for the coming period are as Engine parts Shop direct labor Shop and repair equipment depreciation Shop supervisor salaries Shop property tax Shop supplies Advertising expense Administrative office salaries Administrative office deprecation expense $1,609,800 1,175,000 54,300 151,000 27,400 21,100 32,200 38,400 17,700 $3,226,900 Total costs and expenses The average shop direct labor rate is $25 per hour Determine the predetermned shop overhead rate per direct labor hour Round the answer to nearest whole cent. direct labor hour. Round the answer to nearest whole cent 30X perdirect labor hour

Explanation / Answer

pre determind overhead rate=budgeted over head exp/direct labour hours

direct labour hours=1175000$/25$

   =47000hours

shop over head amount$ shop and repair equipment dep 54300 shop supervisor salaries 151000 shop property tax 27400 shop supplies 21100 total shop overheads 253800$ budgeted direct labour hours 47000hr pre determind shop overhead rate 5.4$/hr

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