D Cherise Ortega, marketing manager for Romer Company, was puzzled by the outcome of two recent E AA bids. The company's policy was to bid 150 percent of the full manufacturing cost. One job (labeled Job 97-28) had been turned down by a prospective customer, who had indicated that the proposed price was $3 per unit higher than the winning bid. A second job (Job 97-35) had been accepted by a customer, who was amazed that Romer could offer such favorable terms. This customer revealed that Romer's price was $43 per unit lower than the next lowest bid. Cherise has been informed that the company was more than competitive in terms of cost control Accordingly, she began to suspect that the problem was related to cost assignment procedures. Upon investigating. Cherise was told that the company uses a plantwide overhead rate based on direct labor hours. The rate is compute at the beginning of the year using budgeted data Selected budgeted data are given below. Department Department B Overhead $500,000 $2,000,000 $2,500,000 Direct labor hours 200,000 50,000 250,000 Machine hours 20,000 120,000 140,000 Total Cherise also discovered that the overhead costs in Department B were higher than those in Department A beca Ramar minment hieher maintenner hoher now into her dentistinn D Cherise Ortega, marketing manager for Romer Company, was puzzled by the outcome of two recent E AA bids. The company's policy was to bid 150 percent of the full manufacturing cost. One job (labeled Job 97-28) had been turned down by a prospective customer, who had indicated that the proposed price was $3 per unit higher than the winning bid. A second job (Job 97-35) had been accepted by a customer, who was amazed that Romer could offer such favorable terms. This customer revealed that Romer's price was $43 per unit lower than the next lowest bid. Cherise has been informed that the company was more than competitive in terms of cost control Accordingly, she began to suspect that the problem was related to cost assignment procedures. Upon investigating. Cherise was told that the company uses a plantwide overhead rate based on direct labor hours. The rate is compute at the beginning of the year using budgeted data Selected budgeted data are given below. Department Department B Overhead $500,000 $2,000,000 $2,500,000 Direct labor hours 200,000 50,000 250,000 Machine hours 20,000 120,000 140,000 Total Cherise also discovered that the overhead costs in Department B were higher than those in Department A beca Ramar minment hieher maintenner hoher now into her dentistinn