Exercise 7-25 Plantwide Rate and Activity-Based Costing

Mattawa Manufacturing Inc. has four categories of overhead. The expected overhead costs for each of the categories for the next year are as follows:

Currently, the company applies overhead using a predetermined overhead rate based upon budgeted direct labour hours of 100,000. The company has been asked to submit a bid on a pro- posed job. Usually bids are based upon full manufacturing costs plus a markup of 60 percent. Estimates for the proposed job are as follows:

Required

1. If the company used activity-based cost drivers to assign overhead, calculate the bid price of the proposed job.

2. If the company used direct labour hours as the cost driver, calculate the bid price of the pro- posed job.