Question

3. Award: 30.00 points

“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 Fabricating Machining Assembly Total Plant Manufacturing overhead $ 355,250 $ 406,000 $ 91,350 $ 852,600 Direct labor $ 203,000 $ 101,500 $ 304,500 $ 609,000

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 Fabricating Machining Assembly Total Plant Direct materials $ 3,300 $ 200 $ 1,700 $ 5,200 Direct labor $ 3,400 $ 500 $ 6,500 $10,400 Manufacturing overhead ? ? ? ?

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?

 Required 4A Required 4B 

Complete this question by entering your answers in the tabs below.

Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct

Answer 1

Anghez:- Pageno ja, Poredetermined srate for the current years . Plant Wide por determined manufacturing overhead rate = Total manufacturing overheads Total Direct labour = $ 852,600 $ 609,000 = loy = $1.40 16, The amount of manufacturing overhead Costi- Application of Manufacturing overhead . = Total Direct labore predetermined overhead rate = $10,400 x $1.48 = 14.560 = $ 141560

PageNo ③ a a) predetermined overhead rate for each department for the current year. Fabrication : anufacturing over head rate - Manufacturing overhead Direct labor 355,250 20 3 000 3 175 = 145% Machining Mauufacturing overheadrate ; Manufacturing overhead : Diocect Laboy = 406,000 101, 500 = 400*fo

Page No ③ Aşgembly- Manufacturing overhead rate = Manufacturing overhead Direct labor 91,350 304 1500 50.3 = 30% The amount of manufacturing, overhead cost that Hould have been applied to kooper's job Fabrication & Direct labor : 3,400 Manufactwring overhead rate = 145 Manufacturing over head = 3,400 X 14s = 5950

PageNow Machining Discect labor = 500 Manufactwring overhead rate : 4 Manufacturing overhead = 2000 (500 x U) Assembly Diouct labor 6.500 Manufacturing overhead rate = 013 Mancat actuoing over head = 6,500 $0.3 = 1950 Total = Fabrication & Hachining & Assembly 5950 + 2000 +1950 9900

ya PageNo The company bid's pria on the Kaopers job using a plant wide predetermined overhead rate Dion et Materials Direct labour 5,200 io, 400 Manufacturing overheads applied 14,960 Total Manufacturing costs = 5200+10400+ 14860 20160 Bid porice = 30160x1.5 - વડQu0 ub, Bid price on the Koopers job using a departmental pru determined Overhead rate Dirrect materials . Direct labour 5,200 . 10,000

Page no @ Manufacturing over head Applied 9900 Tolal Hauntacturing cost = 5200 +10,400+9,900 = 25500 Bid poria = 29500X115 = 38250