Question

Blast 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 $211,000 105,500 $316,500 633,000 $ 369,250 422,000 $ 94,950 886,200 Machining Assembly Total Plant Direct labor Manufacturing overhead Jobs require varying amounts of work in the three departments. The Koopers job, for example, ould have required manufacturing costs in the three departments as follows Department Direct materials Direct labor Manufacturing overhead Fabricating Machining Assembly Total Plant $ 4,100 400 2,500 7,000 $ 5,000 $ 700 7,300 S 13,000 The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs Required . Assuming use of a plantwide overhead rate a. Compute the rate for the current year Predetermined overhead rate % of direct labor cost b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job Manufacturing overhead cost

Answer 1