Chapter 2 - Homework 3 - Algorithmic Saved Help Save & Exit Submit Check my work 1 Case 2-22 (Algo) Plantwide versus Departmental Overhead Rates; Pricing (LO2-1, LO2-2, LO2-3, LO2-4) 80 points "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: eBook Print Manufacturing overhead Direct labor Department Total Fabricating Machining Assembly Plant $ 355,250 $ 406,000 $ 91,350 $852,600 $ 203,000 $101,500 $304,500 $609,000 Reference 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: Direct materials Direct labor Manufacturing overhead Department Fabricating Machining Assembly Total Plant $3,300 $200 $1,700 $ 5,200 $3,400 $500 $6,500 $10,400 ? ? 2 ? Required: 1. Using the company's plantwide approach: a. Compute the plantwide predetermined rate for the current year. b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. 2. Suppose that instead of using a plantwide predetermined overhead rate, the company had used departmental predetermined overhead rates based on direct labor cost. Under these conditions: a. Compute the predetermined overhead rate for each department for the current year. b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. 4. Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead). a. What was the company's bid price on the Koopers job using a plantwide predetermined overhead rate? b. What would the bid price have been if departmental predetermined overhead rates had been used to apply overhead cost? Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required 1A 1B 2A 2B 4A 4B Using the company's plantwide approach, compute the plantwide predetermined rate for the current year. Predetermined overhead rate 140% of direct labor cost Required 1A Required 1B > Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required 1A 1B 2A 2B 4A 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 $ 14,560 Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required 1A 1B 2A 2B 4A 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. Show less Predetermined Overhead Rate Fabricating 9% of direct labor cost department Machining 41% of direct labor cost department Assembly 10% of direct labor cost department Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required 1A 1B 2A 2B 4A 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. Show less A Manufacturing overhead cost $ applied 9,900 Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required 1A 1 B 2A 2B 4A 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? Show less Company's bid price $ 45,240 Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required 1A 1B 2A 2B 4A 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? Show less Manufacturing overhead cost applied $ 14,560
