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Willies 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


Willies 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 875000
Shop direct labor 640000
shop & repair equip depre 45000
Shop supervisor salaries 125800
Shop property tax 22600
shop supplies 16600
ad. ex 17800
admin office salaries 75000
admin office depre ex 10000
                                  -------
                               1,827,000
The average shop direct labor rate is $16 per hour


Determine the predetermined shop overhead rate per direct labor hour. Round the answer to nearest whole cent.


SOLUTION
No. of direct labor hours = direct labor cost/direct labor rate per hour


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