OVERHEAD RATES, UNIT COSTS Xanning Company manufactures specialty tools to customer order. There are three producing departments. Departmental information on budgeted overhead and various activity measures for the coming year is as follows:

Welding Assembly Finishing Estimated overhead $200,000 $22,000 $250,000 Direct labor hours 4,500 10,000 6,000 Direct labor cost $90,000 $150,000 $120,000 Machine hours 5,000 1,000 2,000 Currently, overhead is applied on the basis of machine hours using a plantwide rate.

However, Janine, the controller, has been wondering whether it might be worthwhile to use departmental overhead rates. She has analyzed the overhead costs and drivers for the various departments and decided that Welding and Finishing should base their overhead rates on machine hours and that Assembly should base its overhead rate on direct labor hours.

Janine has been asked to prepare bids for two jobs with the following information:

Job 1 Job 2 Direct materials $4,500 $8,600 Direct labor cost $1,000 $2,000 Direct labor hours:

Welding 10 20 Assembly 60 20 Finishing 30 80 Number of machine hours:

Welding 50 30 Assembly 40 5 Finishing 110 165 The typical bid price includes a 30 percent markup over full manufacturing cost.

Required:

. Calculate a plantwide rate for Xanning Company based on machine hours. What is the bid price of each job using this rate?

. Calculate departmental overhead rates for the producing departments. What is the bid price of each job using these rates? (Round all answers to the nearest dollar.)

Problem