Problem:
1. The 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 ................................ $ 650,750
Shop direct labor ............................. 520,625
Shop and repair equipment depreciation ... 12,800
Shop supervisor salaries ...................... 93,125
Shop property tax .............................. 22,300
Shop supplies ................................... 12,650
Advertising expense ........................... 18,100
Administrative office salaries ................. 61,600
Administrative office depreciation expense ... 8,050
Total costs and expenses .................. $1,400,000
The average shop direct labor rate is $17 per hour.
Determine the predetermined shop overhead rate per direct labor hour.