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Overhead Rates, Unit Costs Folsom Company manufactures specialty tools to customer order. There are three producing...

Overhead Rates, Unit Costs

Folsom Company manufactures specialty tools to customer order. There are three producing departments. Departmental information on budgeted overhead and various activity measures for the coming year is as follows:

Welding Assembly Finishing
Estimated overhead $220,000 $62,000 $150,000
Direct labor hours 4,500 10,000 6,000
Direct labor cost $90,000 $150,000 $120,000
Machine hours 5,000 1,000 2,000

Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, Janine, the controller, has been wondering whether it might be worthwhile to use departmental overhead rates. She has analyzed the overhead costs and drivers for the various departments and decided that Welding and Finishing should base their overhead rates on machine hours and that Assembly should base its overhead rate on direct labor hours.

Janine has been asked to prepare bids for two jobs with the following information:

Job 1 Job 2
Direct materials $6,725 $9,340
Direct labor cost $1,800 $3,100
Direct labor hours:
   Welding 20 10
   Assembly 60 20
   Finishing 20 70
Number of machine hours:
   Welding 50 50
   Assembly 60 25
   Finishing 90 125

The typical bid price includes a 35% markup over full manufacturing cost.

Required:

1. Calculate a plantwide rate for Folsom Company based on machine hours.
$ per machine hour

What is the bid price of each job using this rate? If required, round your answers to the nearest dollar.

Bid price
Job 1 $
Job 2 $

2. Calculate departmental overhead rates for the producing departments. If required, carry your answers out to the nearest cent.

Welding overhead rate $ per machine hour
Assembly overhead rate $ per direct labor hour
Finishing overhead rate $ per machine hour

What is the bid price of each job using these rates? If required, round your answers to the nearest dollar.

Bid price
Job 1 $
Job 2 $

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ekkarill92 answered 1 year ago
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