Spokesman 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
|
$
|
341,800
|
Factory machinery
depreciation
|
54,000
|
|
Factory supervisor
salaries
|
142,500
|
|
Factory direct labor
|
207,757
|
|
Factory supplies
|
44,400
|
|
Factory property tax
|
30,750
|
|
Advertising cost
|
23,000
|
|
Administrative
salaries
|
51,500
|
|
Administrative-related
depreciation
|
19,200
|
|
Total
expected costs
|
$
|
914,907
|
Requirement 1:
|
Determine the predetermined
overhead rate per direct labor hour if the average direct labor rate is
$11.11 per hour. (Round your answer to 2 decimal
places. Omit the "$" sign in your response.)
|
Predetermined overhead
rate
|
$
14.53
 |
per DL Hour
|
Requirement 2:
|
Determine the amount of applied
overhead if 19,000 hours are worked in the upcoming year. (Round your answer to the nearest dollar amount. Omit the
"$" sign in your response.)
|
Applied overhead
|
$
276,070
|
Explanation:
1:
Must first determine expected
number of DL hours.
|
Estimated DL Cost / DL rate =
Estimated DL hours
|
$207,757 / $11.11 = 18,700 DL
hours expected
|
Predetermined Overhead Rate =
Estimated Mfg. Overhead / Estimated DL hours
|
Estimated Total Manufacturing Overhead:
Factory machinery
depreciation
|
$
|
54,000
|
Factory supervisor
salaries
|
142,500
|
|
Factory supplies
|
44,400
|
|
Factory property tax
|
30,750
|
|
Total
Estimated MOH
|
$
|
271,650
|
Predetermined Overhead Rate =
$271,650 / 18,700 DL Hours
|
=
$14.53 per DL Hour
|
2:
Applied Overhead =
Overhead Rate × Actual DL Hours
|
=
$14.53 × 19,000 DL Hours
|
=
$276,070
|
