Question

Wheeler’s Bike Company manufactures custom racing bicycles. The company uses a job order cost system to determine the cost of each bike. Estimated costs and expenses for the coming year follow:
Bike parts ............ $ 350,000
Factory machinery depreciation .... 55,000
Factory supervisor salaries ...... 140,000
Factory direct labor ........ 300,000
Factory supplies .......... 7,500
Factory property tax ....... 37,500
Advertising cost .......... 14,500
Administrative salaries ....... 80,000
Administrative-related depreciation .. 16,000
Total expected costs ....... $1,000,500

Required:
1. Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $15 per hour.
2. Determine the amount of applied overhead if 18,500 actual hours are worked in the upcoming year.



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  • CreatedFebruary 27, 2015
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