Question

"Blast it!” said David Wilson, president of Teledex Company. "We've just lost the bid on the Koopers job by $3,000. 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 Direct labor Manufacturing overhead Fabricating $ 201,000 $ 351,750 Machining $ 100,500 $ 402,000 Assembly $ 301,500 $ 90,450 Total Plant $ 603,000 $ 844,200 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 Direct materials Direct labor Manufacturing overhead Fabricating Machining Assembly Total Plant $ 3,100 $ 300 $ 1,500 $ 4,900 $ 3,000 $ 600 $ 6,300 $ 9,900 ?

Answer 1

(4) Plantawid $1.4. Overhead uate = $844,200 a $ 603,000 .: Manufacteued 0.41 : $9900x $1.4 $13,860 Company's bed paire Quect matuan - Düeer laboi - Manetecteuing at $4900 $ 9900 $ 13,860 porce manufactu Cost - Markup (4150%) - $28,660 $ 42,990 Bid puice - $71,650 . Company's Bid puice & $71,650 Departmental De Rate = $175 fabricatering - $361,750 $ 201,000 $402,000 Machining - - $4 $100,500 Assembly $90,450 $801,500 $03

Manufactuing Overhead faburicating - $3000* $175 - $5250 Machining . $ 600 x $4 & $2400 Assembly - $6300* $0.3 . $1890 fola Oh applied $9540 Company's bid price Diveer malevall - Dieer label Manufacteuing OH- Total manufacturing cast - $ 4900 $ 9900 $ 9540 $24,340 + Marku PC@1507.) - $36,510 Bid pence $60,850 . Company's bid puice - $60,850