Question

Shire Computer's predetermined overhead rate is based on direct labor cost. Management estimates the company will incur $742,000 of overhead costs and $530,000 of direct labor cost for the year. During March, Shire began and completed Job 13-56. 1. What is the predetermined overhead rate for the year? 2. Use the information on the following job cost sheet to determine the total cost of the job. Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the predetermined overhead rate for the year? Overhead Rate Choose Numerator: Choose Denominator: Overhead Rate Overhead rate = 1 Required 2 >

Answer 1

Solution:

1)

Predetermined overhead rate = estimated overhead cost/ estimated direct labor cost

=$742,000/$530,000

=1.4 of direct labor cost.

2)

	Direct material	Direct labor	Overhead	Total cost
Date	Requisition no	Amount	Time ticket no	Amount	Cost applied
Mar 8	4 -129	$6,000	T- 306	$620	$868 (620-*1.4)	$7,488
Mar 11	4-142	$7,350	T-432	$1,330	$1,862 (1,330*1.4)	$10,542
Mar 18	4-167	$3,200	T-456	$1,260	$1,764 (1,260*1.4)	$6,224
		$16,550		3,210	$4,494	$24,254

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