Wheeler’s Bike Company manufactures custom racing bicycles. The company uses a job order cost system to determine the cost of each bike. Estimated costs and expenses for the coming year follow:

Bike parts $350,000
Factory machinery depreciation $55,000
Factory supervisor salaries $140,000
Factory direct labor $300,000
Factory supplies $7,500
Factory property tax $37,500
Advertising cost $14,500
Administrative salaries $80,000
Administrative-related depreciation $16,000
Total expected costs $1,000,500

Required:
1. Calculate the predetermined overhead rate per direct labor hour if the average direct labor rate is $15 per hour.

2. Determine the amount of applied overhead if 18,500 actual hours are worked in the upcoming year.

20000

1. To calculate the predetermined overhead rate per direct labor hour, you need to divide the total estimated overhead costs by the total estimated direct labor hours.

The estimated overhead costs are the sum of factory machinery depreciation ($55,000), factory supervisor salaries ($140,000), factory supplies ($7,500), factory property tax ($37,500), advertising costs ($14,500), and administrative-related depreciation ($16,000), which totals to $270,500 (55,000 + 140,000 + 7,500 + 37,500 + 14,500 + 16,000).

The estimated direct labor hours are not mentioned in the given information. You would need additional information to proceed with this calculation.

2. To determine the amount of applied overhead when 18,500 actual hours are worked in the upcoming year, you can use the predetermined overhead rate per direct labor hour (which you calculated in step 1) multiplied by the actual hours worked.

Let's assume you were given a predetermined overhead rate of $10 per direct labor hour (based on the direct labor rate of $15 per hour and the estimated overhead costs from step 1).

Applied overhead = Predetermined overhead rate x Actual hours worked
Applied overhead = $10 x 18,500
Applied overhead = $185,000

So, the amount of applied overhead when 18,500 actual hours are worked in the upcoming year would be $185,000.