“Don’t tell me we’ve lost another bid!” exclaimed Sandy Kovallas, president of Lenko Products, Inc. “I’m afraid so,” replied Doug Martin, the operations vice president. “One of our competitors underbid us by about $10,200 on the Hastings job.” “I just can’t figure it out,” said Kovallas. “It seems we’re either too high to get the job or too low to make any money on half the jobs we bid anymore. What’s happened?”
|
Lenko Products manufactures specialized goods 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 | ||||||||
|
|
||||||||
| Cutting | Machining | Assembly | Total Plant | |||||
| Direct labor | $ | 306,000 | $ | 202,000 | $ | 414,000 | $ | 922,000 |
| Manufacturing overhead | $ | 530,000 | $ | 831,760 | $ | 95,000 | $ | 1,456,760 |
|
|
||||||||
|
Jobs require varying amounts of work in the three departments. The Hastings job, for example, would have required manufacturing costs in the three departments as follows: |
| Department | ||||||||
|
|
||||||||
| Cutting | Machining | Assembly | Total Plant | |||||
| Direct materials | $ | 11,900 | $ | 900 | $ | 5,600 | $ | 18,400 |
| Direct labor | $ | 6,600 | $ | 1,700 | $ | 12,900 | $ | 21,200 |
| Manufacturing overhead | ? | ? | ? | ? | ||||
|
|
||||||||
| The company uses a plantwide overhead rate to apply manufacturing overhead cost to jobs. |
| Required: | |
| 1. | Assuming the use of a plantwide overhead rate: |
| a. |
Compute the rate for the current year. |
| b. |
Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job. |
| 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. |
| b. |
Determine the amount of manufacturing overhead cost that would have been applied to the Hastings job. (Round your intermediate calculations to the nearest percent.) |
| 4. |
Assume that it is customary in the industry to bid jobs at 150% of total manufacturing cost (direct materials, direct labor, and applied overhead). (Round your intermediate calculations to the nearest percent.) |
| a. |
What was the company’s bid price on the Hastings job if plantwide overhead rate had been used to apply overhead cost? |
| b. |
What would the bid price have been if departmental overhead rates had been used to apply overhead cost? |
| 5. |
At the end of the year, the company assembled the following actual cost data relating to all jobs worked on during the year: |
|
Department |
||||||||
| Cutting | Machining | Assembly | Total plant | |||||
| Direct materials | $ | 761,000 | $ | 90,000 | $ | 409,000 | $ | 1,260,000 |
| Direct labor | 321,000 | 210,000 | 340,000 | 871,000 | ||||
| Manufacturing overhead | $ | 561,000 | $ | 830,000 | $ | 93,000 | $ | 1,484,000 |
|
|
||||||||
| a. |
Compute the underapplied or overapplied overhead for the year, assuming that a plantwide overhead rate is used. (Round your intermediate calculations to the nearest percent.) |
| b. |
Compute the underapplied or overapplied overhead for the year, assuming that departmental overhead rates are used. (Enter all overapplied values as negative numbers. Round your intermediate calculations to the nearest percent.) |
References
eBook & Resources
WorksheetLearning Objective: 04-01 Compute a predetermined overhead rate.Learning Objective: 04-03 Compute the total cost and average cost per unit of a job
Difficulty: HardLearning Objective: 04-02 Apply overhead cost to jobs using a predetermined overhead rate.Learning Objective: 04-04 Compute underapplied or overapplied overhead cost.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
Our Services
Custom Writings Help is a Quality-Oriented Company in Online Writing as a result of hiring exceptional professionals to execute clients' tasks.
Essays
At Custom Writings Help,We understand the struggle of research paper writing, and that is why at Custom WritingS Help, we are all out to help you. We pride ourselves on having a team of clinical writers. The stringent and rigorous vetting process ensures that only the 'BEST' Writers are chosen for the job. We have highly qualified Ph.D. and MA writers working with us; we equally offer these experienced writers specific bonuses and incentives to make them deliver highly original, unique, and informative content at reasonably low prices.
Admissions
Thesis Writing Service
Worlwide, Many Masters Students are struggling with Thesis Completion. A thesis is likely to be the longest and most challenging piece of work a student has ever completed. However, unlike essays and other assignments, a student can pick a particular interest topic and work on their initiative. Fortunately, we are there for you. At Custom Writings Help, you are assured of an authentic, imaginative, informative, linguistically great, and advantageous thesis that adheres to all your needs. So, why continue considering different writers when you have discovered the best in the field?
Editing
Custom Papers
Not a single student can avoid writing custom papers. However, a total lack of experience, skills, and time makes it very hard to produce a superb writing piece. Therefore, if you are seeking professional help, turn to us. Our specialized and experienced writers compose a variety of model papers, including custom essays, college term papers, research papers, book reports, MBA essays, executive summaries, dissertations, Ph.D. theses, admission essays, and research proposals for college and university students at any level.
Coursework
Essay Writing
Most of the students disregard the critical principles of essay writing and compose papers below sensible guidelines. Therefore, with Custom Writings Help, one should not worry about his/her essay. Our Writers compose informative and engaging content on all complexities and topics. We write meaningful and smart essays while prioritizing all aspects that bring about a good grade, such as impeccable grammar, proper structure, zero-plagiarism, and conformance to guidelines.
Coursework
Coourse Work Writing
Don't let the seemingly never-ending onslaught of writing assignments get you down. If you are looking where to get course work assistance online, the writers at Custom Writings Help are here to assist you with all of your writing needs. We undertake to unique delivery of papers that meet the professor's requirements. The content is proofread, edited, and checked plagiarism before submission to customers. No matter how big or small your work is, we will deliver on time. Try US Now! !
Coursework
Dissertation Writing Service
High-Quality Dissertation Writing Services are rare. They require Ph.D. academicians – not easily found. However, are an exception. The years, time, and resources we have invested in the dissertation world has given us a competitive advantage over others. Choose to come to Custom Writings Help; You will find perfect Ph.D. consultants who have written hundreds of dissertations theses ready to help you. Let our dissertation-writing services help you craft your dissertation, for you are assured we will give you the results.