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O predetermined Factory Overhead Rate • Obj. 2 Exotie Engine Shop uses a job order cont system to determine the cost of perfo
Terminology Check 5 | Business Storage Terminology Check 5 | Business Storage Due Date: Feb 14 at 09:00 Points: 10 ✓ Your Sub
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Answer :-

Ex 16-10 )Predetermined shop overhead rate = Total shop overhead cost / direct labor hours

First we calculate the total shop Overhead cost and Direct labor hours

Particular Amount
Shop and repair equipment Deprecation $62,500
Shop supervisor salaries $240,000
Shop property taxes $36,940
Shop supplies $10,000
Total Shop Overhead cost $349,440

Direct labor hours = Shop direct labor / Average shop direct labor rate

Shop Direct labor = $1,872,000

Average shop Direct labor rate = $37.50

Direct Labor hours = $1,872,000 / $37.50

Direct Labor hours = 49920 hours

Now we calculated the Predetermined shop Overhead rate per Direct Labor hours.

Predetermined shop Overhead rate = $ 349,440 / 49920 hours

Predetermined shop Overhead rate = $ 7 per Direct labor hours

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