P8.4 (LO 1, 2, 3, 4), AN Jaden was looking back at the profitability of a few jobs from the prior year, wondering if more profit could have been generated. The executive team of this custom manufacturing shop tries to achieve gross margins near 50% for all of its projects. Each completed job that Jaden examined was profitable when overhead costs were determined using the company's actual costing system. Still, since he didn't have those total job costs until the end of the year, he wondered if he could have built in a larger gross margin if he had been able to better estimate these total job costs sooner. Here is more detailed information on the three jobs Jaden is reviewing: In this manufacturing company, MOH is applied based on direct labor costs. Required a. Determine the gross margin amount and percentage for each job under its current actual costing system. Additionally, what was this company's actual MOH rate for last year? b. If Jaden had used normal costing instead of actual costing, what would the gross margin amount and percentage have been for each job? Assume the same selling prices would have been charged, and assume a budgeted MOH rate of $7/DL dollar would have been used. c. If Jaden had used normal costing with a budgeted MOH rate of $7/DL dollar as described in part (b) and charged a selling price for each job at an amount where the company would generate 50% gross margin, what would the respective selling prices have been for each of these jobs? Do these selling prices differ significantly from the selling prices actually used? d. Suppose you are Jaden, training an intern. Address the following questions, posed by the intern: "Under actual costing, how does the business determine the selling price for a job before it is started (in other words, a bid that the customer would either accept or reject)? Would this process for determining a selling price upfront be any different under normal costing?" P8.4 (LO 1, 2, 3, 4), AN Jaden was looking back at the profitability of a few jobs from the prior year, wondering if more profit could have been generated. The executive team of this custom manufacturing shop tries to achieve gross margins near 50% for all of its projects. Each completed job that Jaden examined was profitable when overhead costs were determined using the company's actual costing system. Still, since he didn't have those total job costs until the end of the year, he wondered if he could have built in a larger gross margin if he had been able to better estimate these total job costs sooner. Here is more detailed information on the three jobs Jaden is reviewing: In this manufacturing company, MOH is applied based on direct labor costs. Required a. Determine the gross margin amount and percentage for each job under its current actual costing system. Additionally, what was this company's actual MOH rate for last year? b. If Jaden had used normal costing instead of actual costing, what would the gross margin amount and percentage have been for each job? Assume the same selling prices would have been charged, and assume a budgeted MOH rate of $7/DL dollar would have been used. c. If Jaden had used normal costing with a budgeted MOH rate of $7/DL dollar as described in part (b) and charged a selling price for each job at an amount where the company would generate 50% gross margin, what would the respective selling prices have been for each of these jobs? Do these selling prices differ significantly from the selling prices actually used? d. Suppose you are Jaden, training an intern. Address the following questions, posed by the intern: "Under actual costing, how does the business determine the selling price for a job before it is started (in other words, a bid that the customer would either accept or reject)? Would this process for determining a selling price upfront be any different under normal costing
