Posted: July 12th, 2016

# Compute the rate for the current year?

Required:
1. Assuming the use of a plantwide overheard rate:
a) Compute the rate for the current year.
b) Determine the amount of manufacturing overhead cost that 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.

3. Explain the difference between the manufacturing overhead that would have been applied ot the Hastings job using the plantwide rate in question 1(b) and using the department rates in question 2(b).

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). What was the company’s bid price on the Hastings job? 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 \$760,000 \$90,000 \$410,000 \$1,260,000
Direct labor \$320,000 \$210,000 \$340,000 \$870,000
Manufacturing overhead \$560,000 \$830,000 \$92,000 \$1,482,000

Compute the underapplied or overapplied overhead for the year (a) assuming that a plantwide overhead rate is used, and (b) assuming that department overhead rates are used.

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