Blast it! said David Wilson, president of Teledex Company. We've just lost the bid on the Koopers job by $3,000. 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' specifications and uses a job-order costing system. The company uses a plantwide predetermined overhead rate based on direct labor cost to apply its manufacturing overhead (assumed to be all fixed) to jobs. The following estimates were made at the beginning of the year: Department Fabricating Machining $ 365,750 $ 418,000 $ 209,000 $ 104,500 Manufacturing overhead Direct labor Assembly $ 94,050 $ 313,500 Total Plant $ 877,800 $ 627,000 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 Machining $ 200 $ 500 Fabricating $3,900 $4,600 Direct materials Direct labor Manufacturing overhead Assembly $2,300 $ 7,100 Total Plant $ 6,400 $12,200 ? Required 1A Required 1B Required 2A Required 2B Required 4A Required 4B Using the company's plantwide approach, determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. Manufacturing overhead cost applied Required 1A Required 1B Required 2A Required 2B Required 4A Required 4B Suppose that instead of using a plantwide predetermined overhead rate, the company had used departmental predetermined overhead rates based on direct labor cost. Compute the predetermined overhead rate for each department for the current year. Predetermined Overhead Rate Fabricating department % Machining department % Assembly department % of direct labor cost of direct labor cost of direct labor cost Required 1A Required 1B Required 2A Required 2B Required 4A Required 4B Suppose that instead of using a plantwide predetermined overhead rate, the company had used departmental predetermined overhead rates based on direct labor cost. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. Manufacturing overhead cost applied Required 1A Required 1B Required 2A Required 2B Required 4A Required 4B Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead). What was the company's bid price on the Koopers job using a plantwide predetermined overhead rate? Company's bid price Required 1A Required 1B Required 2A Required 2B Required 4A Required 4B ----------- Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead). What would the bid price have been if departmental predetermined overhead rates had been used to apply overhead cost? Manufacturing overhead cost applied |