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 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: Department Manufacturing overhead Direct labor Fabricating Machining Assembly Total Plant $ 372,750 $ 426,000 95,850 894,600 $ 213,000 106,500 319,500 639,000 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 Department Direct materials Direct labor Manufacturing overhead Fabricating $4,300 $5,400 Machining $ 300 600 Assembly $2,700 $7,500 Total Plant $ 7,300 $13,500 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 Required 1ARequired 1B Required 2A Required 2B Required 4A Required 4B Using the company's plantwide approach, compute the plantwide predetermined rate for the current year Predetermined overhead rate % |of direct labor cost < Required 1A Required 1B

Answer 1

dng IA. P Totel Diresh tabor cest 6 39000 B. Manu cost atid Rato Rata To tal Discestaborces 8900 actuvingevex Bated on Divesr dabor cest Dixas dabor cest that m ent- Departments | Workings 1 % (Diret tabor cesr 212000 2. Machii 3- 319Soo Deparmenta onerhiad Rats X Labor ces the Dep axhments ma 2400 Axsembley

14100 odo) antutdla 다3co Total Dcet Matrual 18900 140, 135m) Total 34900