Prime Products manufactures specialized goods to customers’ specifications and operates a job-order costing system. Manu

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Prime 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 labour cost. The following estimates were made at the
beginning of the year:
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:
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.
4. Assume that it is customary in the industry
to bid jobs at 140% of total manufacturing cost (direct materials,
direct labour, and applied overhead).
a. What was the company’s bid price on
the Hastings job?
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:
a. Compute the underapplied or
overapplied overhead for the year, assuming that a plantwide
overhead rate is used.
b. Compute the underapplied or
overapplied overhead for the year, assuming that departmental
overhead rates are used.