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price p job cost sheet, what PROBLEM 5-29 Plantwide versus Departmental Overhead Rates; Undera Overhead LO3, LO5, LO7 Don't tell me we've lost another bid" exclaimed Janice Hudson, president of Prime afraid so,"replied Doug Martin, the operations vice president. "One of our competitors about $10,000 on the Hastings job" "I just can't figure it out." said Hudson. "It seems we high to get the job or too low to make any money on half the jobs we bid. Whateither Mou Wes stan lates Prime underbid by s happened? tim Prime Products manufactures specialized goods to customers' specifications and order costing system. Manufacturing overhead cost is applied to jobs on the basisfes a The following estimates were made at the beginning of the year Department Cutting Machining Assembly Total Pla Direct labour Manufacturing overhead 300,000 $200,000 540,000 $800,000 $400,000 S 900.000 $100,000 $1,440,000 Jobs require varying amounts of work in the three departments. The Hastings job, for example, woul have required manufacturing costs in the three departments as follows: Department actining Assembly Total Plant Direct material rect tabour aafactanieg overhead s 900 81,700 $12.000 S 5,600 $13,000 $18,500 $21,200 the company 's a plantwide nerbend rate te apply aanufacturing overhead cost to ssamng the us of a plaiwide overheed rate a Compute the rate for the current year h Dctermine the amount of manufacturing overhead cost that would have been applied to the Hastings joh 2. Suppose that instead of using a plantwide overhcad rate, the company had used a separate predeter- mined overhead rate in each department. Under these conditions: a. Compute the rate for each department for the current year b. Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job. Explain the difference between the manufacturing overhead that would have been applied to the Hastings job using the plantwide rate in I(b) above and using the departmental rates in 2(b). Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labour, and applied overhead). What was the company's bid price on the Hastings job? What would the bid price have been if departmental overhead rates had been used to apply overhead cost? At the end of the year, the company assembled the following actual cost data relating to all jobs worked on during the year: 3. 4. 5. Department Cutting Machining Assembly Total Plant Direct material Direct labour.. Manufacturing overhead.... $760,000 90,000 $320,000 $210,000 $340,000 $410,000 $1,260,000 $560,000 $830,000 $ 92,000 $1.482,000

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