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 estimates:         Direct labor-hours required to support estimated output   36,000 Fixed overhead cost $ 540,000 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 $ 685 Direct labor cost $ 153 Direct labor-hours used   7

Managerial Accounting
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ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter2: Job Order Costing
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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 estimates:

 

     
Direct labor-hours required to support estimated output   36,000
Fixed overhead cost $ 540,000
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 $ 685
Direct labor cost $ 153
Direct labor-hours used   7
 

 

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?

Complete the question by entering your answers in the tabs given below.

Compute the predetermined overhead rate?

Compute Mr. Wilkes’ total job cost.

Direct materials?

Direct labor?

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?

 

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