Building Your Skills Analytical Thinking 2-22 Plantwide versus Departmental Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3, LO2-4) "Blast iti" said David Wilson, president of Teledex Company. "We've just lost the bid on the Koopers job by $3,000. It seems we're elther 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 uses a job-order costing system. The company uses a plantwide predetermined overhead rate based on direct labor cost to apply its manufacturing overhead (assumed to be all fixed) to Jobs. The following estimates were made at the beginning of the year: Manufacturing overhead Direct labo Fabricating Machining $ 371,000 $ 424,000 212,000 $ 106,000 Assembly Total Plant $ 95,400 $ 890,400 $ 318,000 $ 636,000 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: Fabricating $4,200 $5,200 Machining 500 Direct materials Direct labor Manufacturing overhead Assembly $2,600 $7,400 Total Plant $ 7,300 $13,400 Required: 1. Using the company's plantwide approach: a. Compute the plantwide predetermined rate for the current year. b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. 2. Suppose that instead of using a plantwide predetermined overhead rate, the company had used departmental predetermined overhead rates based on direct labor cost. Under these conditions: a Compute the predetermined overhead rate for each department for the current year. b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job 4. Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead) a. What was the company's bid price on the Koopers job using a plantwide predetermined overhead rate? b. What would the bid price have been if departmental predetermined overhead rates had been used to apply overhead cost? Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. Req1A Reg 1B Req2A Req 2B Req 4A Req 48 Using the company's plant wide approach. Compute the plant wide predetermined rate for the current year. Predetermined overhead rato % of direct labor cost Reg 1B > Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 2A Req 2B Reg 4A Reg 4B Using the company's plant wide approach. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. Manufacturing overhead cost applied Complete this question by entering your answers in the tabs below, Req1A Req 18 Reg 2A Rig 28 Reg 4A Reg 48 Suppose that instead of using a plant wide predetermined overhead rate, the company had used departmental predetermined overhead rates based on direct labor cost. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. Manufacturing overhead cost applied Complete this question by entering your answers in the tabs below. Reg 1B Reg 2A Reg 1A Reg 2 Rect4A Reg 4B Assume that it is customary in the Industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead). What was the company's bid price on the Koopers job using a plant wide predetermined overhead rate? Company's bid price ( Reg 28 Req 48 > Complete this question by entering your answers in the tabs below. Reg 13 Req2A Reg 28 Reg 4 Req 4B Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead). What would the bid price have been if departmental predetermined overhead rates had been used to apply overhead cost? Manufacturing overhead cost applied
