"Don't tell me we've lost another bid!" exclaimed Ann Dey, president of Cardinal, Inc. "I'm afraid so," replied Mark Makley, the operations vice president. "One of our competitors underbid us by about $10,000 on the Lakewood job." "I just can't figure it out," said Dey. "It seems we're either too high to get the job or too low to make any money on half the jobs we bid any more. What's happened?" Cardinal, Inc. manufactures specialized goods to customers' specifications and operats a job-order costing system. Manufacturing overhead cost is applied to jobs on the basis of direct labor cost. The following estimates were made at the beginning of the year: Department Direct labor Manufacturing overhead Cutting $300,000 $540,000 Machining Assembly $200,000 $400,000 $800,000 $100,000 Total Plant $900,000 $1,440,000 Jobs require varying amounts of work in the three departments. The Lakewood job, for example, would have required manufacturing costs in the three departments as follows: Department Direct materials Direct labor Manufacturing overhead Cutting $12,000 $6,500 ? Machining Assembly $900 $5,600 $1,700 $13,000 ? ? Total Plant $18,500 $21,200 ? The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs. Required: 1. Assuming use of a plantwide overhead rate: a. Compute the rate for the year, b. Determine the amount of manufacturing overhead cost that would have been applied to the Lakewood job. c. Determine the total cost of the Lakewood 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 the year, b. Determine the amount of manufacturing overhead cost that would have been applied to the Lakewood job. c. Determine the total cost of the Lakewood job. 3. Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost. What was the company's bid price on the Lakewood job? What would the bid price have been if departmental overhead rates had been used to apply overhead cost? 4. At the end of the year, the company assembled the following actual cost data relating to all jobs worked on during the year: Department Total Cutting Machining Assembly Plant Direct materials $760,000 $90,000 $410,000 $1,260,000 Direct labor $320,000 $210,000 $340,000 $870,000 Manufacturing overhead $560,000 $830,000 $92,000 $1,482,000 Compute the over- or underapplied overhead for the year: (a) assuming that a plantwide overhead rate is used, and (b) assuming that departmental overhead rates are used