Speedy Auto Repairs uses a job-order costing system. The companys direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics hourly wages. Speedys overhead costs include various items, such as the shop managers salary, depreciation of equipment, utilities, insurance, and magazine subscriptions and refreshments for the waiting room.

The company applies all of its overhead costs to jobs based on direct labor-hours. At the beginning of the year, it made the following estimates:

Direct labor-hours required to support estimated output48,000Fixed overhead cost$ 864,000Variable overhead cost per direct labor-hour$ 1.00

Required:

1. Compute the predetermined overhead rate.

2. During the year, Mr. Wilkes brought in his vehicle to replace his brakes, spark plugs, and tires. The following information was available with respect to his job:

Direct materials$ 699Direct labor cost$ 236Direct labor-hours used5

Compute Mr. Wilkes total job cost.

3. If Speedy establishes its selling prof its total job cost, then how much would it have charged Mr. Wilkes?

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