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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.
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