Question

"Blast it!" said David Wilson, president of Teledex Company. "We've just lost the bid on the Koopers job by $4,000. 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 $ 204,000 $ 357,000 Machining $ 102,000 $ 408,000 Assembly $ 306,000 $ 91,800 Total Plant $ 612,000 $ 856,800 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 $ 3,400 $ 300 $ 1,800 $ 5,500 $ 3,600 $ 600 $ 6,600 $ 10,800 ? ? The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs.

Answer 1

Answer-1(a):

Pre-determined overhead rate = $856,800 / $612,000 * 100 = 140%

Answer-1(b):

Manufacturing overhead cost applied to Kooper's Job: Total plant Fabricating Machining Assembly 300 $ Direct material 3,400 $ 1,800 $ 5,500 Direct labour 600 3,600 6,600 10,800 9,240 $ Manufacturing overhead 840 5,040 15,120

Amount of manufacturing overhead cost that would have been applied to Kooper's job = $15,120

Answer-2(a):

Answer-2(b):

Answer-4(a):

Answer-4(b):

Answer-5(a):

Answer-5(b):