As of the end of June, the job cost sheets at Racing Wheels, Inc., show the following total costs accumulated on three custom jobs. Job 102 Job 103 Job 104
Direct materials $15,000 $33,000   $27,000  
Direct labor 8,000 14,200   21,000
Overhead applied 4,000 7,100   10,500

Using the accumulated costs of the jobs, what predetermined overhead rate is used?

Job 102 = 29.69% of the Manufacturing Cost.

Job 103 Predetermined overhead rate =26.15%of the Manufacturing Cost.

Job 104 Predetermined overhead rate= 35.89%of the Manufacturing Cost.

Job 102  =  50% of direct labor Cost

Job 103 Predetermined overhead rate 50%of direct labor Cost

Job 104 Predetermined overhead rate= 50%of direct labor Cost

Explanation:

Total Manufacturing Costs

                                           Job 102        Job 103          Job 104

Direct materials                $15,000        $33,000          $27,000  

Direct labor                          8,000           14,200            21,000

Overhead applied                4,000            7,100              10,500

Total                                     $27000         54,300           58500

Predetermined overhead rate = Overhead applied/ Direct Labor Cost *100

                                  Job 102  = 8000/4000 *100= 50% of direct labor Cost

  Job 103 Predetermined overhead rate=14200/ 7100 (100) = 50%of direct labor Cost

Job 104 Predetermined overhead rate=21000/ 10500 (100) = 50%of direct labor Cost

Using the accumulated costs

Predetermined overhead rate = Overhead applied/ Accumulated Costs (100

                                       Job 102 =8000/27000*100= 29.69% of the Manufacturing Cost.

Job 103 Predetermined overhead rate=14200/ 54300 (100) =  26.15%of the Manufacturing Cost.

Job 104 Predetermined overhead rate=21000/ 58500 (100) = 35.89%of the Manufacturing Cost.