Question

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 The company applies all of its overhead costs to jobs based on direct labor-hours. At the beginning of the year, t made the following estimates: Direct labor-hours required to support estimated output Fixed overhead cost Variable overhead cost per direct labor-hour 24,000 $288,000 $ 1.00 es 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: Direct materials Direct labor cost Direct labor-hours used9 $ 615 $208 Compute Mr. Wilkes total job cost. selling prices using a markup percentage of 50% of its total job cost, then how much would it have 3. If Speedy establishes its Mr. Wilkes? Complete the question by entering your answers in the tabs given belovw Required 1 Required 2 Required 3

Answer 1

1) Predetermine overhead rate = (288000/24000)+1 = $13 per direct labor hour

2) Calculate total product cost

Direct material	615
Direct labor	208
Overhead applied (9*13)	117
Total cost assigned to Mr.Wikes	940

3) Amount charged to Mr. Wikes = 940+(940*50%) = $1410