$$Don$$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. $$One of our competitors underbid us by about $$13,000$ 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

Cutting Machining Assembly Total Plant

Direct labour $ $319,500$ $ $213,000$ $ $426,000$ $ $958,500$

Manufacturing overhead $ $575,100$ $ $852,000$ $ $106,500$ $ $1,533,600$

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

Cutting Machining Assembly Total Plant

Direct material $ $22,400$ $ $2,200$ $ $8,200$ $ $32,800$

Direct labour $ $13,000$ $ $4,300$ $ $20,800$ $ $38,100$

Manufacturing overhead $????$

The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs.

Required:

$1.$ Assuming the use of a plantwide overhead rate:

a$.$ Compute the rate for the current year.

b$.$ Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job.

$2.$ Suppose that instead of using a plantwide overhead rate, the company had used a separate predetermined overhead rate in each department. Under these conditions:

a$.$ Compute the rate for each department for the current year.

b$.$ Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job.

$3.$ This part of the question is not part of your Connect assignment.

$4.$ Assume that it is customary in the industry to bid jobs at $140\%$ of total manufacturing cost $($direct materials, direct labour, and applied overhead$).$

a$.$ What was the company$$s bid price on the Hastings job?

b$.$ What would the bid price have been if departmental overhead rates had been used to apply overhead cost?

$5.$ At the end of the year, the company assembled the following actual cost data relating to all jobs worked on during the year:

Department

Cutting Machining Assembly Total Plant

Direct material $ $818,500$ $ $96,500$ $ $436,000$ $ $1,351,000$

Direct labour $ $346,000$ $ $229,500$ $ $360,800$ $ $936,300$

Manufacturing overhead $ $605,500$ $ $907,100$ $ $97,600$ $ $1,610,200$

a$.$ Compute the underapplied or overapplied overhead for the year, assuming that a plantwide overhead rate is used.

b$.$ Compute the underapplied or overapplied overhead for the year, assuming that departmental overhead rates are used.