FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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"Blast it!" said David Wilson, president of Teledex Company. "We've just lost the bid on the Koopers job by $4,000. 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 uses job-order costing. The company uses a plantwide
predetermined overhead rate based on direct labor cost to apply manufacturing overhead (assumed to be all fixed) to jobs. The
following estimates were made at the beginning of the year:
Manufacturing overhead
Direct labor
Fabricating
$367,500
$ 210,000
Direct materials
Direct labor
Manufacturing overhead
Department
Machining
$ 420,000
$ 105,000
Fabricating
$ 4,000
$ 4,800
?
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:
Assembly
$ 94,500
$ 315,000
Department
Machining
$300
$ 600
?
Total Plant
$ 882,000
$630,000
Assembly Total Plant
$ 6,700
$ 12,600
?
$ 2,400
$ 7,200
?
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Transcribed Image Text:"Blast it!" said David Wilson, president of Teledex Company. "We've just lost the bid on the Koopers job by $4,000. 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 uses job-order costing. The company uses a plantwide predetermined overhead rate based on direct labor cost to apply manufacturing overhead (assumed to be all fixed) to jobs. The following estimates were made at the beginning of the year: Manufacturing overhead Direct labor Fabricating $367,500 $ 210,000 Direct materials Direct labor Manufacturing overhead Department Machining $ 420,000 $ 105,000 Fabricating $ 4,000 $ 4,800 ? 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: Assembly $ 94,500 $ 315,000 Department Machining $300 $ 600 ? Total Plant $ 882,000 $630,000 Assembly Total Plant $ 6,700 $ 12,600 ? $ 2,400 $ 7,200 ?
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