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
1 answer:
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
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Graph 1 shows the market equilibrium while graph 2 shows the deadweight loss.
