Question
Blast it! said David Wilson, president of Teledex Company. Weve just lost the bid on the Koopers job by $4,000. It seems were either too
Blast it! said David Wilson, president of Teledex Company. Weve just lost the bid on the Koopers job by $4,000. It seems were 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 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 | $ | 214,000 | $ | 107,000 | $ | 321,000 | $ | 642,000 |
Manufacturing overhead | $ | 374,500 | $ | 428,000 | $ | 96,300 | $ | 898,800 |
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 | $ | 4,400 | $ | 400 | $ | 2,800 | $ | 7,600 |
Direct labor | $ | 5,600 | $ | 700 | $ | 7,600 | $ | 13,900 |
Manufacturing overhead | ? | ? | ? | ? | ||||
The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs. |
Required: | |
Assuming use of a plantwide overhead rate: |
a. | Compute the rate for the current year.
|
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