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Blast it said David Wilson president of Teledex Company We’ve just lost the bid on the Koopers job by $2,000 It seems we’re either too high to get the job or too low to make any moneyon half the

“Blast it!” said David Wilson, president of Teledex Company.“We’ve just lost the bid on the Koopers job by $2,000. It seemswe’re either too high to get the job or too low to make any moneyon half the jobs we bid.” Teledex Company manufactures products to customers’specifications and uses a job-order costing system. The companyuses a plantwide predetermined overhead rate based on direct laborcost to apply its manufacturing overhead (assumed to be all fixed)to jobs. The following estimates were made at the beginning of theyear: Jobs require varying amounts of work in the three departments.The Koopers job, for example, would have required manufacturingcosts in the three departments as follows: Required: 1. Using the company’s plantwide approach: a. Compute the plantwide predetermined rate for the currentyear. b. Determine the amount of manufacturing overhead cost thatwould have been applied to the Koopers job. 2. Suppose that instead of using a plantwide predeterminedoverhead rate, the company had used departmental predeterminedoverhead rates based on direct labor cost. Under theseconditions: a.Compute the predetermined overhead rate for each departmentfor the current year. b. Determine the amount of manufacturing overhead cost thatwould have been applied to the Koopers job. 4. Assume that it is customary in the industry to bid jobs at150% of total manufacturing cost (direct materials, direct labor,and applied overhead). a.What was the company’s bid price on the Koopers job using aplantwide predetermined overhead rate? b.What would the bid price have been if departmentalpredetermined overhead rates had been used to apply overheadcost? . . .

Jun 26 2020 View more View Less

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