Speedy Auto Repairs uses a job-order costing system. The company’s direct materials consist of replacement parts installed in customer vehicles, and its direct labor consists of the mechanics’ hourly wages. Speedy’s overhead costs include various items, s

1. The predetermined overhead rate is calculated by dividing the total estimated overhead costs by the estimated direct labor-hours. In this case, the predetermined overhead rate would be: Predetermined overhead rate = (Fixed overhead cost + (Variable overhead cost per direct labor-hour x Direct labor-hours required)) / Direct labor-hours required = ($114,000 + ($1.00 x 12,000)) / 12,000 = $126,000 / 12,000 = $10.50 per direct labor-hour 2. To calculate the total job cost for Mr. Wilkes' job, we need to add up the direct materials cost, the direct labor cost, and the overhead cost. The overhead cost is calculated by multiplying the predetermined overhead rate by the actual direct labor hours used. In this case, the total job cost would be: Total job cost = Direct materials + Direct labor cost + Overhead cost = $626 + $292 + ($10.50 x 4) = $626 + $292 + $42 = $960 3. If Speedy applies a markup percentage of 40% to its total job cost, then the selling price for Mr. Wilkes' job would be: Selling price = Total job cost + (Markup percentage x Total job cost) = $960 + (0.40 x $960) = $960 + $384 = $1,344