"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 $13,000 on the Hastings job." "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 $ 119,500 5575, 100 Machining Assembly Total Plant $ 211,000 $426,000 5958,500 5 852,000 $105,500 51,533,600 Jobs require varying amounts of work in the three departments. The Hostings job, for example, would have required manufacturing costs in the three departments as follows: Department Direct material Direct Labour Manufacturing overhead Cutting $ 22,400 $ 13,000 2 Machining $ 2,200 $ 4,300 Assembly $3,200 $ 20,00 Total Piant $ 2,800 $ 38,100 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 Predetermines overhead rate 96 Prov S of 5 III Next 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 . Compute the rate for each department for the current year, Pyedetermined Overhead Rate Cutting department Machining department Assembly department 56 b. Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job. Manufacturing overhead cos! Prow S of 5 Next 3. At the end of the year, the company assembled the following actual cost data relating to all jobs worked on during the year. Department Direct material Direct Labour Manufacturing overhead $818,500 5346,000 $605, see Machining $ 96, see $229,500 5907, 100 Assembly $436, ece $360,800 $ 97,600 Total Plant 51,351,000 $936,300 51,610,200 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. Cutting Machining Assembly Total plant