\"Blast it!\" said David Wilson, president of Teledex Company. \"We\'ve just los
ID: 2619477 • Letter: #
Question
"Blast it!" said David Wilson, president of Teledex Company. "We've just lost the bid or 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 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 Fabricating Machining Assembly Total Plant $654,000 $98100 915,600 218,000 + 109,000 327,000 Direct labor Manufacturing 381,500436,000 overhead 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 Tota FabricatingMachiningAssembly $ 4,800 $ 500 $ $ 6,400 800 $ 8,000s 15,200 3,200s 8,500 Direct materials Direct labor Manufacturing overheadExplanation / Answer
Answer 1 a Total Plant direct labour = $654,000 Total Plant Mfg Overhead = $915,600 Predetermined Overhead rate = (Total Plant Mfg Overhead/Total Plant direct labour )*100 Predetermined Overhead rate = 140.00% Answer 1 b Manufacturing overhead cost applied to Koopers Job Total Direct Labour cost of Koopers Job = $15,200 Manufacturing overhead cost applied = 140% * 15,200 = $21,280 Answer 2 a Mfg Overhead Direct Labour Predetermined Overehad rate Fabricating 3,81,500 2,18,000 175% Machining 4,36,000 1,09,000 400% Assembly 98,100 3,27,000 30% Amount of overhead applied to Koopers Job Predetermined Overehad rate Direct Labour Mfg Overhead applied Fabricating 175% 6,400 11200 Machining 400% 800 3200 Assembly 30% 8,000 2400 Total Mfg Overhead cost applied 16800 Answer 2b Calculation of bid price on the koopers job if a departmental overhead rate applied In $ Direct Material 8500 Direct Labour 15200 Mfg Overhead 16800 Total Mfg Cost 37860 Bid price = $37,860 Answer 5 a Computation of underapplied or overapplied mfg overhead if plantwide overhead rate applied Actual manufacturing cost incurred = $957,700 Manufacturing overhead applied = 140% of Direct labour cost = 140%*634,000 = $887,600 Underapplied manufacturing overhead cost = $957,700 - $887,600 = $70,100 Answer 5 b Computation of underapplied or overapplied mfg overhead if departmental overhead rate applied Predetermined Overehad rate Actual Direct labour cost Mfg Overhead applied Actual Mfg Overhead Difference Fabricating 175% 2,28,000 399000 3,93,000 6,000 Overapplied Machining 400% 1,26,000 504000 4,78,000 26,000 Overapplied Assembly 30% 2,80,000 84000 86,700 -2,700 underapplied 987000 9,57,700 29,300 Overapplied Manufacturing overhead cost overapplied = $29,300 Bid price if the Departmental overhead rates were used = $987,000
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