Question

what is the overhear applied and the ammount charged to mr. wikes ?

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 points 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 eBook Direct labor-hours required to support estimated output Pixed overhead cost Variable overhead cost per direct labor-hour 20,000 $ 350,000 1.00 References 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: Drees Orlalu Direet labor cost Direct labor-hours used Compute Mr. Wilkes' total job cost. 3. If Speedy establishes its selling prices using a markup percentage of 40% of its totaljob cost, then how much would it have charged Mr. Wilkes? Complete the question by entering your answers in the tabs given below. Required 1 Required 2 Required 3 Navt >

Answer 1

Fixed overhead rate

= Fixed overhead cost / Direct labor hours required to support estimated output

= $350,000 / 20,000

= $17.50 per direct labor hour

And,

Variable overhead rate = $1 per direct labor hour

Therefore,

Predetermined overhead rate = $17.50 + $1 = $18.50 per direct labor hour.

Now calculate the amount of overhead applied as follows:

Overhead applied = Predetermined overhead rate x Direct labor hours used = $18.50 x 6 = $111

Now calculate total cost assigned to Mr. Wilkes as follows:

Direct materials	590
Direct labor	109
Overhead applied	111
Total cost assigned to Mr. Wilkes	810

Now calculate amount charged to Mr. Wilkes as follows:

Total cost assigned to Mr. Wilkes = $810

Markup percentage = 40% of total job cost

Therefore,

Amount charged to Mr. Wilkes = $810 x 140% = $1,134