Question

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 would the bid price have been if departmental predetermined overhead rates had been used to apply overhead cost

Answer 1

Answer:

Some financial details with which to calculate the bid price are missing,find them in the attached question.

The bid price if the predetermined overhead rates have applied is $112,473.00 as shown below

Explanation:

a) Plantwide Overhead Rate = Manufacturing overhead/direct labor cost=$1,543,610.00/$947,000.00

Plantwide Overhead Rate = $1.63

Total Manufacturing Cost = Direct Material + Direct Labor + overhead applicable

Total Manufacturing Cost = $18,700.00+$21,400.00 + $(21400*1.63 )

Total Manufacturing Cost = $ 74,982

Bid Price = Total Manufacturing Costs *1.5(150%)

Company's Bid Price = $74,982.00*1.5

Company's Bid Price = $ 112,473.00