Question
In: Accounting
peedy Auto Repairs uses a job-order costing system. The company’s direct materials consist of replacement parts...
peedy Auto Repairs uses a job-order costing system. The company’s 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 | 28,000 | |
| Fixed overhead cost | $ | 364,000 |
| Variable overhead cost per direct labor-hour | $ | 1.00 |
Required:
1. Compute the predetermined overhead rate.
2. During the year, Mr. Wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. The following information was available with respect to his job:
| Direct materials | $ | 777 |
| Direct labor cost | $ | 215 |
| Direct labor-hours used | 2 | |
Compute Mr. Wilkes’ total job cost.
3. If Speedy establishes its selling prices using a markup percentage of 30% of its total job cost, then how much would it have charged Mr. Wilkes?
Solutions
Expert Solution
Solution:
1. The estimated total overhead cost is computed as follows
Y = $364,000 + ($1.00 per DLH) 
(28,000 DLHs)
Estimated fixed overhead = $ 364,000
Estimated variable overhead = $1.00 per DLH
28,000 DLHs = $28,000
Estimated Total overhead = $392,000.
The predetermined overhead rate is computed as follows
Estimated Total overhead = $392,000.
Estimated Total direct labor-hours = 28,000 DLHs
Predetermined overhead rate = $392,000 
28,000 = $14.00 per DLH
Predetermined overhead rate = $14.00 per DLH
2. Calculation of total job cost
Total job cost = Direct material + Direct labor + over head applied
Total job cost = $777 + $215 + (2 DLHs
$14.00 per DLH)
Total job cost or Manufacturing cost = $1,020.
3. The price charged to Mr. Wilkes is computed as follows
Total manufacturing cost = $1,020
Markup (30%) = $1,020
30% = $306
Therefore, Selling price = $1,020 + $306 = $1,326.
ekkarill92 answered 1 year agoRelated Solutions
Speedy Auto Repairs uses a job-order costing system. The company’s direct materials consist of replacement parts...
Speedy Auto Repairs uses a job-order costing system. The
company’s 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...
Speedy Auto Repairs uses a job-order costing system. The company’s direct materials consist of replacement parts...
Speedy Auto Repairs uses a job-order costing system. The
company’s 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...
Tech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and software that it purchases and installs on behalf of its clients.
Tech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and software that it purchases and installs on behalf of its clients. The firm's direct labor includes salaries of consultants that work at the client's job site, and its overhead consists of costs such as depreciation, utilities, and insurance related to the office headquarters as well as the office supplies that are consumed serving clients. Tech Solutions computes its predetermined overhead rate...
McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials...
McCullough Hospital uses a job-order costing system to assign
costs to its patients. Its direct materials include a variety of
items such as pharmaceutical drugs, heart valves, artificial hips,
and pacemakers. Its direct labor costs (e.g., surgeons,
anesthesiologists, radiologists, and nurses) associated with
specific surgical procedures and tests are traced to individual
patients. All other costs, such as depreciation of medical
equipment, insurance, utilities, incidental medical supplies, and
the labor costs associated with around-the clock monitoring of
patients are treated...
McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials...
McCullough Hospital uses a job-order costing system to assign
costs to its patients. Its direct materials include a variety of
items such as pharmaceutical drugs, heart valves, artificial hips,
and pacemakers. Its direct labor costs (e.g., surgeons,
anesthesiologists, radiologists, and nurses) associated with
specific surgical procedures and tests are traced to individual
patients. All other costs, such as depreciation of medical
equipment, insurance, utilities, incidental medical supplies, and
the labor costs associated with around-the clock monitoring of
patients are treated...
McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials...
McCullough Hospital uses a job-order costing system to assign
costs to its patients. Its direct materials include a variety of
items such as pharmaceutical drugs, heart valves, artificial hips,
and pacemakers. Its direct labor costs (e.g., surgeons,
anesthesiologists, radiologists, and nurses) associated with
specific surgical procedures and tests are traced to individual
patients. All other costs, such as depreciation of medical
equipment, insurance, utilities, incidental medical supplies, and
the labor costs associated with around-the clock monitoring of
patients are treated...
McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials...
McCullough Hospital uses a job-order costing system to assign
costs to its patients. Its direct materials include a variety of
items such as pharmaceutical drugs, heart valves, artificial hips,
and pacemakers. Its direct labor costs (e.g., surgeons,
anesthesiologists, radiologists, and nurses) associated with
specific surgical procedures and tests are traced to individual
patients. All other costs, such as depreciation of medical
equipment, insurance, utilities, incidental medical supplies, and
the labor costs associated with around-the-clock monitoring of
patients are treated as...
McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials...
McCullough Hospital uses a job-order costing system to assign
costs to its patients. Its direct materials include a variety of
items such as pharmaceutical drugs, heart valves, artificial hips,
and pacemakers. Its direct labor costs (e.g., surgeons,
anesthesiologists, radiologists, and nurses) associated with
specific surgical procedures and tests are traced to individual
patients. All other costs, such as depreciation of medical
equipment, insurance, utilities, incidental medical supplies, and
the labor costs associated with around-the-clock monitoring of
patients are treated as...
McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials...
McCullough Hospital uses a job-order costing system to assign
costs to its patients. Its direct materials include a variety of
items such as pharmaceutical drugs, heart valves, artificial hips,
and pacemakers. Its direct labor costs (e.g., surgeons,
anesthesiologists, radiologists, and nurses) associated with
specific surgical procedures and tests are traced to individual
patients. All other costs, such as depreciation of medical
equipment, insurance, utilities, incidental medical supplies, and
the labor costs associated with around-the-clock monitoring of
patients are treated as...
McCullough Hospital uses a job-order costing system to assign costs to its patients. Its direct materials...
McCullough Hospital uses a job-order costing system to assign
costs to its patients. Its direct materials include a variety of
items such as pharmaceutical drugs, heart valves, artificial hips,
and pacemakers. Its direct labor costs (e.g., surgeons,
anesthesiologists, radiologists, and nurses) associated with
specific surgical procedures and tests are traced to individual
patients. All other costs, such as depreciation of medical
equipment, insurance, utilities, incidental medical supplies, and
the labor costs associated with around-the-clock monitoring of
patients are treated as...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Read at least 2 academically reviewed articles and Write an annotated bibliography paper on Master Budgeting
- Why normalization and referential integrity are important principles when designing relational databases?
- Respond to the following in a minimum of 175 words: Discuss what elements should be present...
- 1) The 3rd bright fringe of a double slit interference pattern is 30.0 cm above the...
- A solar cell generates a potential difference of 0.320 V when a 445.0 ? resistor is...
- A ceiling fan consists of a small cylindrical disk with 5 thin rods coming from the...
- You measure the following quantities as A = 1.0 m ± 0.2 m, B = 2.0...
ADVERTISEMENT