"Don't tell me we've lost another bid!" exclaimed Janice Hudson, president of Prime Products Inc. $"$I$\text{'}$m

afraid so$,"$ replied Doug Martin, the operations vice president. "One of our competitors underbid us by

about $$13,000$ on the Hastings job." $"$l 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

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:

Direct material

Direct labour

Manufacturing overhead

Department

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

Required:

Assuming the use of a plantwide overhead rate:

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

Predetermined overhead rate

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

job.

b$.$

Determine the amount of manufacturing overhead cost that would have been applied to the Hastingsjob.

Manufacturing overhead cost

$3.$

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 $($directmaterials$,$ direct labour, and applied overhead$).$

a$.$

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

Company's bid price

b$.$

What would the bid price have been if departmental overhead rates had been used to apply overheadcost?

Company's bid price