Western Wood Products has two production departments: Cutting and Assembly. The company

has been using a single predetermined cost driver rate based on plantwide direct labour hours.

That is, the plantwide cost driver rate is computed by dividing plantwide support costs by total

plantwide direct labour hours. The estimates for support costs and quantities of cost drivers for

2006 follow:

Cutting Assembly Total__

Manufacturing support cost 25,000 $35,000 $60,000

Direct labour hours 1,000 3,000 4,000

Machine hours 4,000 2,000 6,000

The company received an invitation from NuTech Ltd. to bid on a job Job # 101. This job

would require direct manufacturing costs in the two departments as follows:

Cutting Assembly

Direct material cost $8,000 $1,400

Direct labour cost $250 $800

Direct labour hours 7 35

Machine 50 -

Required

a) Calculate the single plantwide cost driver rate (using direct labour hours for 2006)

b) Determine the total cost to be charged to Job 101, using the single plantwide rate.

c) Calculate the departmental cost driver rates based on direct labour hours for assembly

and machine hours for cutting. (3 marks)

d) Determine the total cost to be charged to Job 101, using the departmental rates.

e) The company has a policy to add a50% markup to estimated job costs to arrive at the bid

price. Determine the bid price for Job 101, using:

i. the plantwide manufacturing support cost driver rate; and

ii. the departmental manufacturing cost driver rates. (4 mark)