Predetermined Factory Overhead Rate
Spring Street 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
|
$875,000
|
|
Shop direct labor
|
660,000
|
|
Shop and repair equipment depreciation
|
44,500
|
|
Shop supervisor salaries
|
138,000
|
|
Shop property taxes
|
27,500
|
|
Shop supplies
|
10,000
|
|
Advertising expense
|
22,100
|
|
Administrative office salaries
|
73,500
|
|
Administrative office depreciation expense
|
8,600
|
|
Total costs and expenses
|
$1,859,200
|
The average shop direct labor rate is $30 per hour.
Determine the predetermined shop overhead rate per direct labor hour. Round to the nearest cent.