Question 1: Plantwide versus Departmental Overhead Rates; Underapplied or Overapplied Overhead (Case 8-36, page 412) (40 marks) "Blast it!" said David Wilson, president of Teledex Company. "We've just lost the bid on the Koopers job by $2,000. It seems we're either too high to get the job or too low to make any money on half the jobs we bid." Teledex Company manufactures products to customers' specifications and operates a job-order costing system. Manufacturing overhead cost is applied to jobs on the basis of direct labor cost. The following estimates were made at the beginning of the year: Department Fabricating Machining Assembly Total plant $200,000 $100,000 S300,000 $600,000 $350,000 $400,000 $90,000 $840,000 Direct labor Manufacturing overhead Jobs require varying amounts of work in the three departments. The Koopers job, for example, would have required manufacturing costs in the three departments as follows Department Fabricating Machining Assembly Total plant Direct materials Direct labor Manufacturing $3,000 $2,800 $200 $500 S1,400 $6,200 $4,600 $9,500 overhead The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs