Willie’s Engine Shop uses a job order cost system to determine the cost of performing engine repair work. Estimated costs and expenses for the coming period are as follows:
Engine parts................. $ 875,000
Shop direct labor............... 640,000
Shop and repair equipment depreciation...... 45,000
Shop supervisor salaries............. 125,800
Shop property tax............... 22,600
Shop supplies.................. 16,600
Advertising expense.............. 17,800
Administrative office salaries........... 75,000
Administrative office depreciation expense..... 10,000
Total costs and expenses.............. $1,827,800
The average shop direct labor rate is $16 per hour. Determine the predetermined shop overhead rate per direct labor hour.