Plantwide Overhead Rate versus Departmental Rates, Effects on Pricing Decisions Cherise Ortega, marketing manager for Romer Company, was puzzled by the outcome of two recent bids. The company's policy was to bid 150 percent of the full manufacturing cost. One job (labeled Job 97-28) had been turned down by a prospective customer, who had indicated that the proposed price was $3 per unit higher than the winning bid. A second job (Job 97-35) had been accepted B a customer, who was amazed that Romer could offer such favorable terms. This customer revealed that Romer's price was $43 per unit lower than the nexvt lowest bid. Accordingly, she began Cherize hes been informed that than comnetitive related to cost assignment procedures. Upon investigating, Cherise was told that the company uses a plantwide ouerhead rate based on direct laher houre The rste comauted at the heaingina of the vear using.budgeted data Selected budgeted data are given helne Department A Departnent B Tota Qverhead $500,000 $2,000,000 $2,500,000 Direct labor haurs 200,000 50,000 250,000 Machine hours 20.000 125.000 145.000 because B has more equipment, higher maintenance, higher power consumption, higher depreciation, and higher setup costs. In eddition to the general procedures Cherise also discovered thet the overhead costs in Department B were higher than those in Department for assigning overhead costs, Chenise was supplied with e following specific manufacturing data on Jobs 97-28 and 97-35: Job 97-28 Department A Total Department B Direct labor hours s,000 1,000 6.000 Machine hours 200 700 $120,000 Prime costs $100,000 $20,000 Units produced 14.400 14,400 14.400 Job 97-35 Total Department A Department B Direct labor hours 400 600 1,000 Machine hours 200 3,000 3,200 Prime costs $15.000 $40.000 $55,000 Units produced 1,500 1,500 1,500 Required: nearest cent 1. Using a plantwide overhead rate based on direct labor hours, develop the bid prices for Jobs 97-28 and 97-35 (express the bid prices on a per-unit basis). If required, round your answers Required: a per unit basis). If required, round your answers to the nearest cent 1. Using a plantwide overhead rate based on direct labor hours, develoo the bid prices r1obs 7-28 and 97-35 (express the bid prices Unit bid price Joh 97-28 Job 97-35 2. Using departmental overhead rates (use direct labor hours r Denartment & and machine hours Department B), develop per-unit dprices for Jobs 97-28 and 97-35, If required, round intermediate computations and final answers th nearest cent Unit bid price cb 97-28 Job 97-35 3. Compute the difference in gross profit that would have been earned had the company used departmental rates in its bids instead of the plantwide rate. Round your intermediate computations to two decimal places and final answer to the nearest dollar Gross profit would have increased by