"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." Teledex Company manufactures products to customers' specifications and uses job-order costing. The company uses a plantwide predetermined overhead rate based on direct labor cost to apply manufacturing overhead (assumed to be all fixed) to jobs. The following estimates were made at the beginning of the year: Manufacturing overhead Direct labor Fabricating $367,500 $ 210,000 Direct materials Direct labor Manufacturing overhead Department Machining $ 420,000 $ 105,000 Fabricating $ 4,000 $ 4,800 ? 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: Assembly $ 94,500 $ 315,000 Department Machining $300 $ 600 ? Total Plant $ 882,000 $ 630,000 Assembly Total Plant $ 6,700 $ 12,600 ? $ 2,400 $ 7,200 ?

"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." Teledex Company manufactures products to customers' specifications and uses job-order costing. The company uses a plantwide predetermined overhead rate based on direct labor cost to apply manufacturing overhead (assumed to be all fixed) to jobs. The following estimates were made at the beginning of the year: Manufacturing overhead Direct labor Fabricating $367,500 $ 210,000 Direct materials Direct labor Manufacturing overhead Department Machining $ 420,000 $ 105,000 Fabricating $ 4,000 $ 4,800 ? 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: Assembly $ 94,500 $ 315,000 Department Machining $300 $ 600 ? Total Plant $ 882,000 $ 630,000 Assembly Total Plant $ 6,700 $ 12,600 ? $ 2,400 $ 7,200 ?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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