Reference no: EM132684502

Problem - Predetermined factory overhead rate

Pierpont 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 $700,000

Shop direct labor 520,000

Shop and repair equipment depreciation 38,000

Shop supervisor salaries 100,000

Shop property tax 18,000

Shop supplies 13,000

Advertising expense 2,184

Administrative office salaries 14,240

Administrative office depreciation expense 60,000

Total costs and expenses $1,471,240

The average shop direct labor rate is $20 per hour.

Required - Determine the predetermined shop overhead rate per direct labor hour.