"Don't tell me we ve fost another biat" exclaimed Janice Hudson, president of Prime Products Inc. "Tim afraid so," replied Boag Martin. the operations vice president. "One of our competitors underbid us by about $12.000 on the Hastings job" "I just camt figure It out," said Huctson. "It scems we're elther 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 speclatized goods to customers' specificatksns 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: Jobs require varying amounts of work in the three departments. The Hastings job, for example, would have required mamutactuaing costs in the three departinents as follows The company uses a plantwide overtiead tate to apply inansfacturing overherad cost to jobs. Required: 1. Assuming the use of a plantwide overhead rate: a. Compute the rate for the current year. 1. Assuming the use of a plantwide overhead rate: a. Compute the rate for the current yeat. b. Determine the amount of manufacturing overhead cost that would hove 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 deparment for the current year. 2. Suppose that instead of using a plantwide overhead rate, the company had used a separate predetermined overtiead rate in each departinent. 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 laboug, and appliced 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 cos?? 5. At the end of the yeat, the company assembled the following actual cost data relating to all jobs worked on during the year. a. Compute the underapplied or overapplied overhead for the yeat, asssuming that a plantwide overhead rate is used. b. Compute the underapplied or overapplied overhead for the year, assuming that departmental overhead rates are used
