Item 20 When Bavarian Motor Works (BMW), a German company, opened a production facility in Spartanburg, South Carolina in 1994, a number of its existing suppliers (particularly of component parts) opened facilities there as well. Both BMW and its suppliers depend on each other for their business success, and they have developed strong business relationships over many years. The many contracts that BMW and its suppliers enter into each year are known as contracts

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, such as the shop manager’s 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 output 20,000 fixed overhead cost $ 350,000 variable 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 $ 590 direct labor cost $ 109 direct labor-hours used 6