Here\'s the info I\'ve been provided: Engine parts 650,750 shop direct labor 520
ID: 2367006 • Letter: H
Question
Here's the info I've been provided:Engine parts 650,750
shop direct labor 520,625
shop and repair depreciation 12,800
shop supervisor salaries 93,125
shop property taxes 22,300
shop supplies 12,650
advertising income 18,100
adminstrative salaries 61,600
adminstrative office depreciation expense 8050
The average shop direct labor rate is $17 per hour. I'm trying to determine the predetermined shop overhead rate per direct labor hour.
Would I add up shop salaries + shop proprty tax + shop supplies + shop repair depreciation and then multiple that by the $17 per hour?
Explanation / Answer
For calculating the Predet OH rate, First add all Indirect expenses which are directly related to factory viz shop and repair depreciation 12,800 shop supervisor salaries 93,125 shop property taxes 22,300 shop supplies 12,650 ---------------------------------- Total Fact OH $140,875 Total Dir Lab cost is $520625 & per Dir Lab Hr rate : $17 So No of DL hrs = 520625/17 = 30625 DL Hrs As you will use DL Hrs rate for calculating Fact OH, OH rate = Total OH/DL Hrs = 140875/30625 = $4.60 per DL hr...........Ans