“Blast it!” said David Wilson, president of Teledex Company. “We ve just lost the bid

 
   

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“Blast it!” said David Wilson, president of Teledex Company. “We ve just lost the bid on the Koopers job by $2,000. It seems we re either too high to get the job or too low to make any money on half the jobs we bid.” Teledex Company manufactures products to customers specifications and uses a job-order costing system. The company uses a plant wide predetermined overhead rate based on direct labor cost to apply its manufacturing overhead (assumed to be all fixed) to jobs. The following estimates were made at the beginning of the year: Jobs require varying amounts of work in the three departments. The Koopers job, for example, would have required manufacturing costs in the three departments as follows: Required: 1. Using the company s plant wide approach: a. Compute the plant wide predetermined rate for the current year. b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. 2. Suppose that instead of using a plant wide predetermined overhead rate, the company had used departmental predetermined overhead rates based on direct labor cost. Under these conditions: a. Compute the predetermined overhead rate for each department for the current year. b. Determine the amount of manufacturing overhead cost that would have been applied to the Koopers job. 3. Explain the difference between the manufacturing overhead that would have been applied to the Koopers job using the plant wide approach in question 1 (b) and usin