Concord Auto Parts (CAP) has a Seat Manufacturing Department that uses ABC. CAP's activity cost allocation rates include the following: (Click on the icon to view ABC system data.) Suppose Ford has asked for a bid on 30,000 built-in baby seats that would be installed as an option on some Ford SUVs. Each seat has 14 parts and the direct materials cost per seat is $7. The job would require 11,000 direct labor hours at a labor wage rate of $20 per hour. In addition, CAP will use a total of 250 machine hours to fabricate some of the parts required for the seats. Read the requirements. ... Requirement 1. Compute the total cost of producing and packaging 30,000 baby seats. Also compute the average cost per seat. (Round the average cost per seat to the nearest cent.) Direct materials Direct labor Allocated overhead: Machining Assembling Packaging Total cost of order Divide by number of seats Average cost per seat Requirement 2. For bidding, CAP adds a 15% markup to total cost. What price will the company bid for the Ford order? Begin by determining the formula to calculate the price the company will bid for the Ford order. X Bid price The company will bid for the Ford order, Requirement 3. Suppose that instead of an ABC system, CAP has a traditional product costing system that allocates manufacturing overhead at a plantwide overhead rate of $70 per direct labor hour. The baby seat order will require 11,000 direct labor hours. Compute the total cost of producing the baby seats and the average cost per seat. What price will CAP bid using this system's total cost? Begin by computing the total cost of producing the baby seats and the average cost per seat. (Round the average cost per seat to the nearest cent.) Direct materials Direct labor Manufacturing overhead Total cost of order Divide by number of seats Average cost per seat Begin by determining the formula to calculate the price the company will bid for the Ford order using this system's total cost Bid price The company will bid for the Ford order using this system's total cost Requirement 4. Use your answers to Requirements 2 and 3 to explain how ABC can help CAP make a better decision about the bid price it will offer Ford CAP's bid would be using the plantwide overhead rate than using ABC. Assuming that the ABC system more accurately captures the costs caused by the order the traditional plantwide overhead system the order. This leads to a bid price that CAP's chance of winning the bid. The ABC system shows that CAP can its chance of winning the bid by bidding a Activity Allocation Base Machining Number of machine hours Activity Cost Allocation Rate $80.00 per machine hour 0.90 per part 1.40 per finished seat Number of parts Assembling Packaging Number of finished seats