Question
Blast it! said David Wilson, president of Teledex Company. Weve just lost the bid on the Koopers job by $3,000. It seems were either too
Blast it! said David Wilson, president of Teledex Company. Weve just lost the bid on the Koopers job by $3,000. 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 | $ | 206,000 | $ | 103,000 | $ | 309,000 | $ | 618,000 |
Manufacturing overhead | $ | 360,500 | $ | 412,000 | $ | 92,700 | $ | 865,200 |
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 | $ | 3,600 | $ | 300 | $ | 2,000 | $ | 5,900 |
Direct labor | $ | 4,000 | $ | 600 | $ | 6,800 | $ | 11,400 |
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. Predetermined overhead rate is ____________ % of direct labor cost
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started