A car repair shop applies overhead to different service jobs using direct labor hours. The manager estimates

Question:

A car repair shop applies overhead to different service jobs using direct labor hours.

The manager estimates that total indirect costs will be $$30,000$ and total direct labor hours will be 2,000.

a. What is the application rate for indirect costs?

b. If a service job requires five direct labor hours, how much indirect service costs will be applied to that service job?

c. If direct labor costs $$10$ per hour, what would be the total service costs of a service job that requires six direct labor hours and requires $$100$ of parts?

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a To calculate the application rate for indirect costs divide the total indirect costs by the total direct labor hours 30000 2000 hours 15 per direct labor hour b If a service job requires five direct labor hours the amount of indirect service costs applied to that service job would be 5 hours x 15 75 c The total service costs of a service job that requires six direct labor hours and requires 100 of parts would be 6 hours x 10 per hour direct labor cost 100 parts cost 6 hours x 15 indirect cost ...View the full answer

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