King Company manufactures specialty tools to costomer order. Budgeted overhead for the coming year is as follows:

Purchasing $30,000 Engineering $20,000 Setups $15,000 Other $25,000

Previously, Maribel, Kings company controller had applied overhead on the basis of machine hours. Expected machine hours for the coming year are 10,000. Maribel had been reading about activity based costing, and she wonders whether or not it might offer some advantage to her company. She decided that appropriate drivers for overhead activities are purchase orders for purchasing, number of setup for setup cost, engineering hours for enginnering cost, and machine hours for other. Budgeted amount for these drivers are 5,000 purchase orders 1000, setups and 500 engineering hours.

Maribel has been asked to prepare bids for two jobs with the following information:

Job 1

Direct Materials $4,500

Direct labor $1,000

Number of purchase order 15

Number of setups 2

number of engineering hours 25

Number of machine hours 200

Job 2

Direct Materials $8,600

Direct labor $2,000

Number of purchase order 20

Number of setups 3

number of engineering hours 10

Number of machine hours 200

The typical bid price includes a 30% markup over the full manufactoring cost.

1.Calculate a plantwide overhead rate for King Company based on machine hours. Wich is the total manufactoring cost for each job? What is the bid price of each job using this rate?

2. Calculate activity rate for the three overhead activities. Which is the total manufacturing cost for each job? What is the bid price of each job using these rates?