70.2K

Verified Solution

Link Copied!

Blast it! said David Wilson, president of Teledex Company. Weve just lost the bid on the Koopers job by $3,000. It seems were 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
Direct labor	$	206,000	$	103,000	$	309,000	$	618,000
Manufacturing overhead	$	360,500	$	412,000	$	92,700	$	865,200

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
	Fabricating		Machining		Assembly		Total Plant
Direct materials	$	3,600	$	300	$	2,000	$	5,900
Direct labor	$	4,000	$	600	$	6,800	$	11,400
Manufacturing overhead		?		?		?		?

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

Required:
1.	Assuming use of a plantwide overhead rate:

a.	Compute the rate for the current year. Predetermined overhead rate is ____________ % of direct labor cost b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. manufacturing overhead cost ____________ please explain how you got the answer.

Answer & Explanation Solved by verified expert

See Answer