Saved Help Save & Exit Submit Check my work Floyd's Auto Repair Shop uses a job order cost system to track the cost of each repair. Floyd's applies its garage or shop overhead at a rate of $20 per direct labor hour spent on each repair. Floyd's uses the following accounts to track the cost of all repairs: Raw Materials (parts and supplies) Repair Jobs in Process Cost of Repairs Completed and Sold Garage/Shop Overhead Costs * Because an auto shop does not manufacture a product, the overhead cost would include all of the Indirect costs that are incurred in the garage or shop that cannot be traced to a specific repair job. The following transactions occurred during the most recent month: (a) Purchased raw materials (parts and supplies) on account $21,300. (b) Used $15,800 in raw materials (parts and supplies). Of this, $12,300 was for major parts that were traceable to individual repair jobs, and the remainder was for incidental supplies such as lubricants, rags, fuel, and so on. (c) Recorded a total of $8.200 in direct labor cost (for 410 hours) that are owed but not yet paid. (d) Applied overhead to repair jobs at a rate of $25.00 per direct labor hour. (e) Recorded the following actual overhead costs: Rent on garage (prepaid in the prior month) $13,600 1,500 Garage supervisor's salary (owed but not yet paid). 4,800 Depreciation on repair equipment (f) Completed repair jobs costing $55,000 and charged customers at cost plus an additional 32 percent. (Note: You can bypass the Finished Goods Inventory account, which is not appropriate in this context.) Prev 1 of 1 Next