Question

1.66 points E2-5 Calculating Predetermined Overhead Rate and Applied Overhead [LO 2-3] Bike Company manufactures oustom racing bicycles. The company uses a job onder cost system to determine the cost of each bike. Estimated costs and expenses for the coming year fo alkow Bike parts Factory machinery depreciation Factary supervisor salanes Factory drect labor Factory supplies Factory property tax Advertising cost Administrative salaries Adminisrative-related depreciation Total expected costs $350,800 59,500 141,000 240,828 42,900 30,250 25.000 54,000 21,700 5965,978 Required: 1. Calouiate the predetermined overheed rate per direct labor hour the average to 2 decimal places-) drect labor rate is $12.81 per hour. (Round your answer per DL Hour 2. Determine the amount of applied overhead i# 19,100 actual hours are worked in the upcoming year (Round your intermediate calculations to 2 decimals. Round your final answer to the nearest whole dollar.) Hints References eBook &Resources int N1 Check my work

Answer 1

First we need to calculate the labour hours that are expected in the coming year. Than only we will be able to calculate the Overhead rate per direct labour hour.

Since the total cost that is estimated for the direct labour is $240828

And the rate of direct labour is $12.81

The direct labour hour can be calculated as 240828/12.81

This means a total of 18,800 hours of direct labour.

#1

Now we need to calculate the total cost and then we need to divide this cost in the total expected hours.

So the cost that will be included is

Factory machinery depreciation + Factory supervisor salaries + Factory supplies + Factory property tax

59500+141000+42900+30250

=273650

So Pre-determined overhead rate can be calculated as = cost/labour hours

273650/18800

=14.55

#2

The applied overhead rate will be calculated as per the hours that are expected to work in the coming year.

Since the hours that are 18800 and the rate is 14.55 we get the applied overhead rate that is

18800*14.55

=273540