Predetermined Factory Overhead Rate Spring Street Engine Shop uses a job order c
ID: 2407076 • Letter: P
Question
Predetermined Factory Overhead Rate
Spring Street 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:
The average shop direct labor rate is $23 per hour.
Determine the predetermined shop overhead rate per direct labor hour. Round the answer to nearest whole cent.
$ per direct labor hour
The following events took place for Chi-Lite Inc. during June, the first month of operations as a producer of road bikes:
a. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Colons (:) will fill in where needed.
Chi-Lite Inc.
Income Statement
1
2
3
4
5
6
7
8
The following events took place for Chi-Lite Inc. during June, the first month of operations as a producer of road bikes:
X
Income Statement
a. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method. Refer to the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. Colons (:) will fill in where needed.
Chi-Lite Inc.
Income Statement
1
2
3
4
5
6
7
8
X
Inventory Balances
b. Determine the inventory balances at the end of the first month of operations.
The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July:
Required:
CHART OF ACCOUNTS
a. Provide the journal entries for each of these transactions. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 10
JOURNAL
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
b. How much office overhead is over- or underapplied?
c. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services.
Engine parts $1,228,900 Shop direct labor 897,000 Shop and repair equipment depreciation 38,400 Shop supervisor salaries 106,700 Shop property tax 19,400 Shop supplies 14,900 Advertising expense 24,600 Administrative office salaries 105,700 Administrative office depreciation expense 13,500 Total costs and expenses $2,449,100Explanation / Answer
Predetermined shop overhead rate = Estimated overheads/Estimated direct labor hours = $179400/39000 = $4.60 per direct labor hour
Estimated overheads:
Estimated direct labor hours = Shop direct labor cost/Average shop direct labor rate = $897000/$23 = 39000
Note: Engine parts and shop direct labor is prime cost while advertising expense, administrative office salaries, and administrative office depreciation expense are selling and administrative expenses and hence excluded from the total estimated overheads.
Per Chegg guidelines, please post independent questions separately. Thank you.
Shop and repair equipment depreciation 38400 Shop supervisor salaries 106700 Shop property tax 19400 Shop supplies 14900 Total estimated overheads $ 179400Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.