Concept explainers
CASE 2-22 Plantwide versus Departmental Overhead Rates; Pricing LO2-1, LO2-2, LO2-3, LO2-4
'Blast it!” said David Wilson, president of Teledex Company. “We’ve just lost the bid on the Koopers job by $2000. It seems we’re either too half to pet 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
Department
FabricatingMachiningAssemblyTotal Plant
Manufacturing overhead....$350,000$400,000$90,000$840,000
Direct labor.......$200,000$100,000$300,000$600,000
Jobs require varying amounts of work in the three departments. The Koopers job, for example, would have required
Department
Fabricating | Machining | Assembly | Total Plant | |
Direct materials | $3,000 |
$200 | $1,400 | $4,600 |
Direct labor | $2,800 | $500 | $6,200 | $9,500 |
Manufacturing overhead ... | ? |
? | ? | ? |
Required:
- Using the company's plantwide approach:
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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Managerial Accounting
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