Wheeler\'s Bike Company manufactures custom racing bicycles. The company uses a

Question

Wheeler's Bike Company manufactures custom racing bicycles. The company uses a job order cost system 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 Administrative-related depreciation Total expected costs $345,800 60,500 138,500 203,685 42,400 25,750 23,500 51,000 17,700 $908,835 Required 1. Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $11.01 per hour. (Round your answer to 2 decimal places.) Predetermined Overhead Rate per DL Hour 2. Determine the amount of applied overhead if 18,800 actual hours are worked in the upcoming year. (Round your intermediate calculations to 2 decimals. Round your final answer to the nearest whole dollar.) lied Overhead

Explanation / Answer

Expected Factory labor cost = 203685

Cost per direct labor hour = $11.01

Expected direct labor hours = $203685/$11.01 = 18500 direct labor hours

Expected manufacturing overhead = Factory machinery depreciation + Factory supervisor salaries + Factory supplies + Factory property tax

Expected manufacturing overhead = $60500 + $138500 + $42400 + $25750 = $267150

1.

Pre-determined overhead rate = Expected manufacturing overhead/Expected direct labor hours = $267150/18500 = $14.44 per direct labor hour

2.

Amount of applied overhead = Pre-determined overhead rate*Actual direct labor hours = 14.44 * 18,800 = $271472

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