Speedy Auto Repairs uses job$-$order costing. Its 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, it made the following estimates:

Direct labor$-$hours required to support estimated output $48,000$

Fixed overhead cost $ $864,000$

Variable overhead cost per direct labor$-$hour $ $1\mathrm{.}00$

Required:

Compute the predetermined overhead rate.

During the year, Mr$.$ Wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. The following information pertains to his job:

Direct materials $ $699$

Direct labor cost $ $236$

Direct labor$-$hours used $5$

Compute Mr$.$ Wilkes$$ total job cost.

If Speedy establishes selling prices using a markup percentage of $50\%$ of its total job cost, then how much would it have charged Mr$.$ Wilkes? Predetermined overhead rate per DLH $?$ Direct materials $?$

Direct labor $?$

Overhead applied $?$

Total cost assigned to Mr$.$ Wilkes $?$ Amount charged to Mr$.$ Wilkes $?$

Answer rating: 100% (QA)

Speedy Auto Repairs Job Costing 1 Predetermined Overhead Rate Speedy uses direct laborhours DLH as t... View the full answer