Modern Metalworks Company has two? departments, milling and assembly. The company uses a job costing system with a plantwide cost driver rate that is computed by dividing plantwide overhead costs by total plantwide practical capacity direct labor hours. The following cost and practical capacity estimates are for? October:

The following information pertains to job 714, which was started and completed during? October:

Requirements

(a) Determine the cost of job 714. ?

(b) Suppose that instead of using the plantwide cost driver? rate, the company uses machine hours as the cost driver for the applying overhead costs in the milling? department, and uses direct labor hours as the cost driver in the assembly department. Compute these departmental cost driver rates and determine the cost of job 714 using these rates.

(c) Using the costs you computed in parts a and b, determine the bid price that Modern Metalworks will quote under each cost system if it uses a 25% markup on total manufacturing cost.

(d) Provide reasons why Modern Metalworks might prefer the method in part a or the one in part b.

Estimates

	Milling	Assembly
Overhead costs	$120,000	$160,000
Direct labor hours	8,000	12,000
Machine hours	12,000	6,000

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Job information

	Milling	Assembly
Direct labor hours	10	40
Machine hours	18	8
Direct materials costs	$800	$50
Direct labor costs	$100	$600