Question

"Blast it" said David Wilson, president of Teledex Company. "We've just lost the bid on the Koopers job by $3,000. Iit 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 manufocturing overhead (ass jobs. The following estimates were made at the beginning of the year umed to be all fixed) to ook Fabricating Machining int enbly Total Pian Manufacturing overhead Direct labor s 379,75O 434,000 $ 97,650 911,400 217,000 108, 500 325,500 651,000 Jobs require vanying amounts of work In the three departments. The Koopers job, for example, would have required manu the three departments. The Koopers job, for example, would have required manufacturing costs in the three departments as follows Department Fabricating Machiningsembly Total Plant Direct saterials Direct labor Manufacturing overhead $4,700 6,200 s 300 s 600 $3,100 $7,900 s 8,100 $14,700 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

Answer 1

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