Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

Predetermined overhead rate % of direct labor cost

c.

Compute the rate for each department for the current year.

Predetermined Overhead Rate
Fabricating Department %
Machining department %
Assembly department %

d.

Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job.

Manufacturing overhead cost

Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead).

e. What was the company's bid price on the Koopers job if a plantwide overhead rate had been used to apply overhead cost?

Company's bid price

f. What would the bid price have been if departmental overhead rates had been used to apply overhead cost?

Company's bid price

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 $ 204,000 $ 17,400 $ 128,000 $ 349,400
Direct labor 224,000 122,000 276,000 622,000
Manufacturing overhead $ 385,000 $ 458,000 $ 86,300 $ 929,300

g. Compute the underapplied or overapplied overhead for the year, assuming that a plantwide overhead rate is used.

overhead cost
h.

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
Machining
Assembly
Total plant

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Audit Process Principles Practice And Cases

Authors: Iain Gray, Louise Crawford, Stuart Manson

7th Edition

1473760186, 9781473760189

More Books

Students also viewed these Accounting questions

Question

Solve the absolute value equation. |20x40 = 180x - 201

Answered: 1 week ago

Question

=+ (b) If F is continuous, then E[F(X)) =;.

Answered: 1 week ago