Rebellion Ltd provides bar service for private events Rebell

Rebellion Ltd provides bar service for private events. Rebellion employs 6 university students at an annual rate of $27,000 per employee for 1,080 hours. It charges all direct labour costs to clients. Rebellion provides their own kegs of beer for events at a charge of $110 per 19L keg. The direct material cost is $40 per keg. Rebellion includes any other costs in a single indirect cost pool and allocates them to jobs per keg. For the year ended Dec 31, 2017, actual indirect costs were $287,000, 1,080 DL hours were incurred, and 14,350 kegs produced and sold. Estimated Indirect costs for 2018 are $294,000. Rebellion anticipates that direat labour willbe similar to 2017, and estimates keg production a 4,000 kegs. (a) What is Rebellion\'s predetermined overhead rate per keg?$ (b) What is the direct labour rate per hour? (o) What is the total Zost of a 4 hour event that will tike 2 employees serving 3 kegs? s

Solution

1. Rebellion\'s Predetermined Overhead rate for 2018 Predetermined Overhead rate = Indirect Costs / Direct Labour Hours = 294000/1080 = 272.2222 2. Direct Labour rate per hour Direct Labour Rate per hour = (27000)/1080 = 25.00 3. Total cost of 4 hour event Direct Material Cost = 40*3 =       120.00 Direct Labour Cost = 4*25*2 =       200.00 Overhead allocation = 272.22*4 =    1,088.88 Total cost of 4 hour event    1,408.88