Question 2: Job Order Costing 25 marks The Fun Toy company has two departments, moulding and assembly. The company uses a job costing system with a plantwide cost driver rate that is computed by total plantwide practical capacity which is 80% of its theoretical capacity. The following cost and the theoretical capacity estimates are for August: Costs Moulding Assemblye Overhead costs $120,000 $160,000 Direct labor hours 10,000 15,000 Machine hours 15,000 7,500 The following information pertains to job T101, which was started and completed during August: Costs Moulding Assembly Direct labor hours 12 hours 43 hours Machine hourse 18 hours 8 hours Direct materials costs $900- $60 Direct labor costs $200 $700 11. T. Required a) Determine the cost of job T101 using plantwide cost driver rate using direct labour hours. 4 marks b) Suppose that instead of using the plantwide cost driver rate, the company uses machine hours as the cost driver for applying overhead costs in the moulding department, and uses direct labor hours as the cost driver in the assembly department. Compute cost of job T101 using departmental cost driver rates 4 marks c) Using the costs you computed in requirement (a) and (b), determine the bid price that Fun Toy company will quote under each cost system if it uses a 25% markup on total manufacturing cost. 2 marks d) Provide reasons why Fun Toy might prefer the method in requirement (a) or the one used in requirement (b). 15 marks