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"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 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: Manufacturing overhead Direct labor Fabricating $ 357,000 $ 204,000 Direct materials Direct labor Manufacturing overhead Department Machining $ 408,000 $ 102,000 Fabricating $3,400 $3,600 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 $ 91,800 $ 306,000 Department Machining $ 300 $600 7 Total Plant $ 855,800 $ 612,000 Asseably $1,80 $6,500 2 Total Plant $ 5,500 5:10,000 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: a. Compute the predetermined overhead rate for each department for the current year. b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job.

"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 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: Manufacturing overhead Direct labor Fabricating $ 357,000 $ 204,000 Direct materials Direct labor Manufacturing overhead Department Machining $ 408,000 $ 102,000 Fabricating $3,400 $3,600 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 $ 91,800 $ 306,000 Department Machining $ 300 $600 7 Total Plant $ 855,800 $ 612,000 Asseably $1,80 $6,500 2 Total Plant $ 5,500 5:10,000 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: a. Compute the predetermined overhead rate for each department for the current year. b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job.

FINANCIAL ACCOUNTING
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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"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 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: Manufacturing overhead Direct labor Fabricating $ 357,000 $ 204,000 Direct naterials Direct labor Manufacturing overhead Fabricating $3,400 $3,600 Department Machining $ 408,000 $ 102,000 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: Required: 1. Using the company's plantwide approach: Assembly $ 91,800 $ 306,000 Department Machining $ 300 $600 Total Plant $ 856,800 $ 612,000 Assembly $ 1,800 $6,600 Total Plant, $ 5,500 $.10,000 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: a. Compute the predetermined overhead rate for each department for the current year. b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job.
Transcribed Image Text:"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 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: Manufacturing overhead Direct labor Fabricating $ 357,000 $ 204,000 Direct naterials Direct labor Manufacturing overhead Fabricating $3,400 $3,600 Department Machining $ 408,000 $ 102,000 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: Required: 1. Using the company's plantwide approach: Assembly $ 91,800 $ 306,000 Department Machining $ 300 $600 Total Plant $ 856,800 $ 612,000 Assembly $ 1,800 $6,600 Total Plant, $ 5,500 $.10,000 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: a. Compute the predetermined overhead rate for each department for the current year. b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job.
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