Problem 4-57 Overhead Rates, Unit C sts Objective 2 Folsom Company manufactures specialty tools to customer order. There are three producing departments. Departmental information on budgeted overhead and various activity measures for the coming year is as follows: EXCEL Welding Assembly Finishing Estimated overhead $220,000 $ 62,000 $150,000 Direct labor hours 4,500 10,000 6,000 Direct labor cost $ 90,000 $150,000 $120,000 Machine hours 5,000 1,000 2,000 Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, Janine, the controller, has been wondering whether it might be worthwhile to use departmental overhead rates. She has analyzed the overhead costs and drivers for the various departments and decided that Welding and Finishing should base their overhead rates on machine hours and that Assembly should base its overhead rate on direct labor hours. Janine has been asked to prepare bids for two inhs with the fallawine information Janine has been asked to prepare bids for two jobs with the following information: Job 1 Job 2 $6,725 $1,800 $9,340 $3,100 20 Direct materials Direct labor cost Direct labor hours: Welding Assembly Finishing Number of machine hours: Welding Assembly Finishing 60 20 10 20 70 50 60 50 25 125 90 The typical bid price includes a 35% markup over full manufacturing cost. Round all overhead rates to the nearest cent. Round all bid prices to the nearest dollar. Required: 1. Calculate a plantwide rate for Folsom Company based on machine hours. What is the bid price of each job using this rate? Answer Welding 20 10 Assembly 60 20 Finishing 20 70 Number of machine hours: Welding 50 50 Assembly 60 25 Finishing 90 125 The typical bid price includs a 35% markup over full manufacturing cost. Round all overhead rates to the nearest cent. Round all bid prices to the nearest dollar. Required: 1. Calculate a plantwide rate for Folsom Company based on machine hours. What is the bid price of each job using this rate? Answert 2. Calculate departmental overhead rates for the producing departments. What is the bid price of each job using these rates? Answer $ 3 Enter the appropriate amounts or formulas in the shaded els 4 An asterisk (*) will appear in the column to the right of an income amount 5 Round all overhead rates to the nearest cont. Round all other answers to the nearest whole number 6 Total Machine 7 1. Total Overhea Hours Rate 8 Overhead rate $432,000 8,000 $54 9 10 11 Job 1 Job 2 12 Direct materials 6,725 $ 9.340 13 Direct labor 1,800 3.100 14 Machine Hrs 15 Overhead 200 10,800 10,800 16 Total manufacturing costs $ 19,325 $ 23,240 17 Markup 6,764 8,134 18 Bid price $ 26,089 $ 31,374 19 20 21 2. Dept. OH Hours Rate 22 Welding overhead rate $220,000 5.000 $44.00 23 per machine hour 24 Assembly overhead rate $62,000 10.000 $6.20 per DLH 25 26 Finishing overhead rate $150.000 2,000 $75.00 per machine hour 27 28 29 Job 1 30 Job 2 Direct materials $6,725 $9,340 31 Direct labor 1,800 3,100 32 Overhead 33 Welding X P 4-57 + Rate Hours Welding overhead rate Dept. OH $220,000 Hours 5,000 Rate $44.00 per machine hour 10,000 $6.20 per DLH Assembly overhead rato 562.000 Finishing overhead rate $150,000 2,000 $75.00 per machine hour Job 1 $6,725 1,800 Job 2 $9,340 3,100 Rate $2,200 Houns 2000 19 20 21 2. 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Direct materials Direct labor Overhead: Welding Jobt Job 2 Assembly Job 1 Job 2 Fishing Job 1 Job 2 Total manufacturing cost Markup Bid price $372.00 $8,525 $12,440 $38.673