From cost accounting comprehensive problem #2 Beauville Furniture Corporation

9. Calculate the following overhead rates for the furniture plant: (1) plantwide rate and (2) departmental rates. Use the direct method for assigning service costs to producing departments. Round your answers to two decimal places.

	Rate
Plantwide rate			per DLH
Cutting department			per MH
Assembly department			per DLH

10. For each of the overhead rates computed in Requirement 9, calculate unit bid prices for Jobs A500 and B75. Round your answers to two decimal places.

	Unit Bid
Plantwide rates
Job A500
Job B75
Departmental rates.
Job A500
Job B75

Assume that the companys aggressive bidding policy is unit cost plus 50 percent. Did departmental overhead rates have any effect on Beauvilles winning or losing bids? What recommendation would you make? Explain. Round your answers to two decimal places.

Departmental rates __increase/decrease__the bid for the more __easily/difficult to___produced Job A500 and __increase/decrease_____ the bid for the more ___easily/difficult______ to produce Job B75. This appears to be in the right direction. We would recommend using the ___departmental/plantwide___ rates.

Now, adjust the costs and bids for departmental rate bids using the proposed standard costs for the Coloring and Bolting Department. Did this make a difference? What does this tell you? Round your answers to two decimal places. Enter all amounts as positive numbers.

Standard cost would __increase/decrease__ the cost of Fabric FB70 for both jobs. For Job A500, prime costs will __increase/decrease___

by $_________. And for Job B75, prime costs will __increase/decrease__ by _$________. Thus, the bid for Job A500 will __increase/decrease__

by $________. Similarly, the bid for Job B75 will __increase/decrease__ by $_________. This tells us that we __can/can not__

apparently avoid including waste in our bid by using standard costs and

_improve/worse__ our bidding. It also tells us that we need to focus on becoming

__more/less__ efficient.