Cose 2-22 (Atgo) Plantwide versus Departmental Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3, [OO4] "Elost it: seid Dowid Wison, oresident of Teiedex Company. "We Ve just lost the bid on the Koopers job by 54,000 it seems we re either too high to get the job or too low to make any money on heif the jobs we bid: Teledex Company manufactures products to customers specifcations and uses a job-order costing system. The company uses a plantwide predetermined overhead rote based on direct labor cost to appy its manufacturing overthesd (assimied to be all fixed) to joba. The following estimater were made at the beginning of the yedr Jobs fequire varying amounts of work in the three departinents. The Koopeis job, for example, would fiave required manufacturing costs in the three departments as follows. Dequired: 1. Using the company plantwide approach a. Compute the plantwide predetermined rate for the current year. b. Determine the amount of manufacturing overnead cost that would have been applied to the Koopers job. 2 Suppose that instead of using a plantwide prederemined overhead rate, the compary had used departmental predetermined overhead rates based on direct lebor cost Under these conditions: a. Compute the predetermined overhesd rote for each department for the current yeat. b. Determine the omosnt of manufacturing overhead cosi that would have been applied to the Koopers job. 4. Assume that it is customary in the industry to bid jobs of 150% of totai manufacturing cost jdirect materiak, direct taboc, and applied overheas?. a. What was the company/s bid price on the Koopers job using a plantwide predetermined overhead rate? b. What would the bid price heve been if departmental peedetermined overhead rates had been used to apply overhtiad cost? Complute thiv question by entering vour anowers in the tats below. Cose 2-22 (Atgo) Plantwide versus Departmental Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3, [OO4] "Elost it: seid Dowid Wison, oresident of Teiedex Company. "We Ve just lost the bid on the Koopers job by 54,000 it seems we re either too high to get the job or too low to make any money on heif the jobs we bid: Teledex Company manufactures products to customers specifcations and uses a job-order costing system. The company uses a plantwide predetermined overhead rote based on direct labor cost to appy its manufacturing overthesd (assimied to be all fixed) to joba. The following estimater were made at the beginning of the yedr Jobs fequire varying amounts of work in the three departinents. The Koopeis job, for example, would fiave required manufacturing costs in the three departments as follows. Dequired: 1. Using the company plantwide approach a. Compute the plantwide predetermined rate for the current year. b. Determine the amount of manufacturing overnead cost that would have been applied to the Koopers job. 2 Suppose that instead of using a plantwide prederemined overhead rate, the compary had used departmental predetermined overhead rates based on direct lebor cost Under these conditions: a. Compute the predetermined overhesd rote for each department for the current yeat. b. Determine the omosnt of manufacturing overhead cosi that would have been applied to the Koopers job. 4. Assume that it is customary in the industry to bid jobs of 150% of totai manufacturing cost jdirect materiak, direct taboc, and applied overheas?. a. What was the company/s bid price on the Koopers job using a plantwide predetermined overhead rate? b. What would the bid price heve been if departmental peedetermined overhead rates had been used to apply overhtiad cost? Complute thiv question by entering vour anowers in the tats below
