Lenko Products manufactures specialized goods to customers\' specifications and

Question

Lenko Products manufactures specialized goods 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:

    

    
Jobs require varying amounts of work in the three departments. The Hastings job, for example, would have required manufacturing costs in the three departments as follows:

        

The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs.

Required:

1. Assuming the use of a plantwide overhead rate:

a. Compute the rate for the current year.

I got 168%

b. Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job.

I got 35,768

2. Suppose that instead of using a plantwide overhead rate, the company had used a separate predetermined overhead rate in each department. Under these conditions:

     
a.Compute the rate for each department for the current year.(Round predetermined overhead percentages to the nearest whole percent.)

I got cutting dept 163% , machining 448% and assembly department 21%

I need help with the following:

b. Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job. (Round your predetermined overhead percentages to the nearest whole percent.)

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 Hastings job if the plantwide overhead rate had been used to apply overhead cost?

b.What would the bid price have been if departmental overhead rates had been used to apply overhead cost?

     

5. At the end of the year, the company assembled the following actual cost data relating to all jobs worked on during the year:

      

       

a. Compute the underapplied or overapplied overhead for the year, assuming that a plantwide overhead rate is used.

b. Compute the underapplied or overapplied overhead for the year, assuming that departmental overhead rates are used.

Department Cutting Machining Assembly Total Plant Direct labor $ 319,000 $ 218,000 $ 404,000 $ 941,000 Manufacturing overhead $ 521,000 $ 976,880 $ 83,000 $ 1,580,880

Explanation / Answer

2b. Department Cutting Machining Assembly Total Plant Direct materials $12,100 $1,000 $5,700 $18,800 Direct labor $6,600 $1,700 $13,000 $21,300 Manufacturing overhead = Direct labour x plantwide overhead rate $10,758 $7,616 $2,730 $21,104 Direct labor plant wide overhead rate Applied Overhead Cutting $6,600 163.00% $10,758 Machining $1,700 448.00% $7,616 Assembly $13,000 21.00% $2,730 Total applied overhead $21,104 4 a. Direct materials $18,800 Direct Labour $21,300 Manufacturing overhead applied (above) 35768 Total manufacturing cost $75,868 Bidding rate 150.00% Total bid price $113,802 4 b Direct materials $18,800 Direct Labour $21,300 Manufacturing overhead applied (above) $21,104 Total manufacturing cost $61,204 Bidding rate 150.00% Total bid price $91,806 5a Actual overhead cost $1,485,000 Applied overhead cost ($868,000 × 168%) $1,458,240 Underapplied overhead cost $26,760 5b Department Cutting Machining Assembly Total Plant Manufacturing overhead 561000 831000 93000 1485000 Applied overhead cost: calculated below $518,340 $936,320 $71,610 $1,526,270 Underapplied (over-applied) overhead cost $42,660 -$105,320 $21,390 -$41,270 Direct labor plant wide overhead rate Applied overhead 318000 163.00% $518,340 209000 448.00% $936,320 341000 21.00% $71,610 $1,526,270

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