Speedy Auto Repairs uses job-order costing. Its direct materials consist of replacement parts installed in...
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Accounting
Speedy Auto Repairs uses joborder costing. Its 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 laborhours. At the beginning of the year, it made the following estimates:
Direct laborhours required to support estimated output
Fixed overhead cost $
Variable overhead cost per direct laborhour $
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