Question

parts 1,2 and 3. Please and thank you

Speedy Auto Repairs uses a job-order costing system. The company's direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics' hourly wages. Speedy's overhead costs include various items, such as the shop manager's salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for the waiting room Skpoed The company applies all of its overhead costs to jobs based on direct labor-hours. At the beginning of the year, it made the following estimates: Direct labor-hours required to support estimated output Fixed overhead cost Variable overhead cost per direct labor-hour 50,000 $ 925,000 Required: 1. Compute the predetermined overhead rate. 2. During the year Mr. Wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. The following information was available with respect to his job: 519 Dirett saterials Direct labor cost Direct labor hours used

Answer 1

Answer to Requirement 1:

Estimated manufacturing overhead = Estimated variable manufacturing overhead per direct labor hour * Estimated direct labor hours + Estimated fixed manufacturing overhead
Estimated manufacturing overhead = $1.00 * 50,000 + $925,000
Estimated manufacturing overhead = $975,000

Predetermined overhead rate = Estimated manufacturing overhead / Total estimated direct labor hours
Predetermined overhead rate = $975,000 / 50,000
Predetermined overhead rate = $19.50 per direct labor-hour

Answer to Requirement 2:

Manufacturing overhead applied = Predetermined overhead rate * Actual direct labor hours
Manufacturing overhead applied = $19.50 * 6
Manufacturing overhead applied = $117

Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead applied
Total manufacturing cost = $619 + $254 + $117
Total manufacturing cost = $990

Answer to Requirement 3:

Amount charged = Total manufacturing cost + 60% * Total manufacturing cost
Amount charged = $990 + 60% * $990
Amount charged = $1,584