d Help Save "Don't tell me we've lost another bidr" exclaimed Janice Hudson, president of Prime Products Inc "I'm afraid so," replied Doug Martin, the operations vice president. "One of our competitors underbid us by about $14,000 on the Hastings job." "I just can't figure it out," said Hudson. "It seems we're either too high to get the job or too low to make any money on half the jobs we bid. What's happened? Prime Products manufactures specialized goods to customers' specifications and operates a job order costing system. Manufacturing overhead cost is applied to jobs on the basis of direct labour cost. The following estimates were made at the beginning of the year. Department Direct labour Manufacturing overhead Cutting $ 330,eee $ 594,000 Machining $ 220,000 $ 880, eee Assembly $ 440,000 $ 110,000 Total Plant $ 990,000 $1,584,000 Jobs require varying amounts of work in the three departments. The Hastings job, for example, would have required manufacturing costs in the three departments as follows: Department Direct material Direct labour Manufacturing overhead Cutting $ 28,000 $ 16,500 Machining $2,900 $ 5,700 Assembly $ 9,600 $ 25,000 Total plant $ 40,50e $ 47,200 ? The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs. Required: 1. Assuming the use of a nlantwine overhead rate earch RI View pred "Don't tell me we've lost another bid! exclaimed Janice Hudson, president of Prime Products Inc. "I'm afraid so." replied Doug Martin, the operations vice president. "One of our competitors underbid us by about $14,000 on the Hastings job. I just can't figure it out." said Hudson. "It seems we're either too high to get the job or too low to make any money on half the jobs we bid. What's happened? Prime Products manufactures specialized goods to customers' specifications and operates a job order costing system. Manufacturing overhead cost is applied to jobs on the basis of direct labour cost. The following estimates were made at the beginning of the year Department Direct labour Manufacturing overhead Cutting $ 330,000 $ 594,000 Machining $ 220,000 $ 880,000 Assembly $ 440,000 $ 110,000 Total Plant $ 990,000 $1,584,000 Jobs require varying amounts of work in the three departments. The Hastings job, for example, would have required manufacturing costs in the three departments as follows: Department Direct material Direct labour Manufacturing overhead Cutting $ 28,000 $ 16,500 ? Machining $ 2,900 $ 5,700 Assembly $ 9,600 $ 25,000 ? Total Plant $ 40,500 $ 47,200 2 13: arch
