At the end of the year, the company assembled the following actual cost data relating to all jobs worked on during the year.
Compute the underapplied or overapplied overhead for the year, assuming that a plantwide overhead rate is used.
Compute the underapplied or overapplied overhead for the year, assuming that departmental overhead rates are used.(Enter overapplied overhead costs as negative amounts and underapplied overhead costs as positive amounts.)
\"Blast it!" said David Wilson, president of Teledex Company. \"We've just lost the bid on the Koopers job by $4,000. It seems we're either too high to get the job or too low to make any money on half the jobs we bid." Teledex Company manufactures products to customers' specications and operates a job order costing system. Manufacturing overhead cost is applied to jobs on the basis of direct labor cost. The following estimates were made at the beginning of the year: Department Fabricating Machining Assembly Total Plant Direct labor $ 204,000 $ 102,000 $ 306,000 $ 612,000 Manufacturing overhead $ 357,000 $ 408,000 $ 91,800 $ 856,800 Jobs require varying amounts of work in the three departments. The Koopers job, for example, would have required manufacturing costs in the three departments as follows: Department Fabricating Machining Assembly Total Plant Direct materials $ 3,400 $ 300 $ 1,800 $ 5,500 Direct labor $ 3,600 $ 600 $ 6,600 $ 10,800 Manufacturing overhead ? ? ? ? The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs. Required: 1. Assuming use of a plantwide overhead rate: a. Compute the rate for the current year. 5. At the end of the year, the company assembled the following actual cost data relating to all jobs worked on during the year. Department Cutting Machining Assembly Total plant Direct materials $ 194,000 $ 16,400 $ 118,000 $ 328,400 Direct labor 214,000 112,000 266,000 592,000 Manufacturing overhead $ 365,000 $ 426,000 $ 85,300 $ 876,300 a. Compute the underapplied or overapplied overhead for the year, assuming that a plantwide overhead rate is used. Overapplied V b. Compute the underapplied or overapplied overhead for the year, assuming that departmental overhead rates are used. (Enter overapplied overhead costs as negative amounts and underapplied overhead costs as positive amounts.) Fabricating E $ 6,300 _E 2,400 Assembly Total plant Underapplied overhead cost Overapplied overhead cost 1.a Plantwide rate Manufacturing overhead $856,800 Direct Labour $612,000 B Rate 1.4 A/B or 140% b. Koopers job rate Manufacturing Overhead Fabricating $5,040 3600*1.4 Direct Labour*O/H rate Machining $840 600*1.4 Assembly $9,240 6600*1.4 Total Overhead cost $15,120 2a Fabricating Machining Assembly Manufacturing overhead $357.000 $408,000 $91,800 Direct Labour $204,000 $102,000 $306,000 Rate 1.75 0.3 in % 175% 400% 30% Manufacturing Overhead Direct Labour $3,600 $600 $6,600 Rate 1.75 4 0.3 Total overhead cost $6,300 $2,400 $1,980 $10,680 4a Direct Material $5.500 Direct Labour $10,800 Overhead $15,120 Total Cost $31,420 Bid Price $47,130 |150% of total cost Direct Material $5.500 Direct Labour $10,800 Overhead $10,680 Total Cost $26,980 Bid Price $40,470 150% of total cost
