EXERCISE 2-9 Job-Order Costing and Decision Making LO2-1, LO2-2, LO2-3 Taveras Corporation is currently operating at 50% of its available manufacturing capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production Fixed manufacturing overhead cost Variable manufacturing overhead cost per machine-hour 165,000 $1,980,000 $2.00 Required I. Compute the plantwide predetermined overhead rate. 2. During the year, Job P90 was started, completed, and sold to the customer for $2500. The following information was available with respect to this job: Direct materials Direct labor cost $830 72 Compute the total manufacturing cost assigned to Job P90 Upon comparing Job P90's sales revenue to its total manufacturing cost, the company's chief financial officer said "If this exact same opportunity walked through our front door tomorrow I'd turn it down rather than making it and selling it for $2,500." a. Construct an argument (supported by numerical analysis) that refutes the chief financial 3. officer's assertion. b. Construct an argument (accompanied by numerical analysis) that supports the chief financial officer's assertion. EXERCISE 2-10 Applying Overhead Cost to a Job LO2-2 Sigma Corporation applies overhead cost to jobs on the basis of direct labor cost. Job V, which was started and completed during the current period, shows charges of $5,000 for direct materials 8,000 for direct labor, and $6,000 for overhead on its job cost sheet. Job W, which is still in pro- cess at year-end, shows charges of $2.500 for direct materials and S4,000 for direct labor Required I. Should any overhead cost be applied to Job W at year-end? If so, how much? Explain. 2 How will the costs included in Job W's job cost sheet be reported within Sigma Corporation's financial statements at the end of the year