02 Homework Help Case 2-22 Plantwide versus Departmental Overhead Rates; Pricing

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02 Homework Help Case 2-22 Plantwide versus Departmental Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3, LO2-4] 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." s 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: Depar Manufacturing overhead Direct labor Fabricating Machining Assembly Total Plan 367,500 420,000 94,500 882,000 s 210,000 105,000 315,000 630,000 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 Direct materials Direct labor Manufacturing overhead Fabricatin $4,000 $4,800 300 600 $2,400 $7,200 6,700 $12,600 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:

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1 a Total Manufacturing Overhead $      882,000.00 Total Labour Cost $      630,000.00 Predetermined Overhead rate 140% b Direct Labour $        12,600.00 Predetermined Overhead rate 140% Manufacturing Overhead Applied(12600*1.4) $        17,640.00

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