"Blast it!" said David Wilson, president of Teledex Company. "We've just lost the bid on the Koopers job by $10,200. 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 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 $300,000 $201,000 $401,000 $902,000
Manufacturing overhead $540,000 $804,000 $100,250 $1,444,250
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 $11,900 $900 $5,500 $18,300
Direct labor $6,500 $1,700 $13,100 $21,300
Manufacturing overhead ? ? ? ?
The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs.
Requirement 1:
Assuming the use of a plantwide overhead rate:
a. Compute the rate for the current year. (Round your answer to the nearest whole percent. Omit the "%" sign in your response.)
Predetermined overhead rate % of direct labor cost
Requirement 2:
Suppose that instead of using a plantwide overhead rate, the company had used a separate predetermined overhead rate in each department. Under these conditions:
a. Compute the rate for each department for the current year. (Omit the "%" sign in your response.)
Predetermined
overhead rate
Fabricating Department %
Machining Department %
Assembly Department %