Brown Products manufactures specialized goods to customers’specifications and operates a job-order costing system.Manufacturing overhead cost is applied to jobs based on directlabour cost. The following estimates were made at the beginning ofthe year:

	Department
	Cutting			Machining			Assembly			Total Plant
Direct labour	$	322,500		$	215,000		$	430,000		$	967,500
Manufacturing overhead	$	580,500		$	860,000		$	107,500		$	1,548,000

Jobs require varying amounts of work in the three departments.The Home Stores job, for example, would have required manufacturingcosts in the three departments as follows:

	Department
	Cutting			Machining			Assembly			Total Plant
Direct material	$	24,000		$	2,400		$	8,600		$	35,000
Direct labour	$	14,000		$	4,700		$	22,000		$	40,700
Manufacturing overhead		?			?			?			?

The company uses a plantwide overhead rate to applymanufacturing overhead cost to jobs.

Required:

1. Assuming the use of a plantwide overheadrate:

a. Compute the rate for the currentyear.

b. Determine the amount ofmanufacturing overhead cost that would have been applied to theHome Stores job.

  

2. Suppose that instead of using a plantwideoverhead rate, the company had used a separate predeterminedoverhead rate in each department. Under these conditions:

a. Compute the rate for eachdepartment for the current year.

b. Determine the amount ofmanufacturing overhead cost that would have been applied to theHome Stores job.

  

3. Assume that it is customary in the industryto bid jobs at 140% of total manufacturing cost (direct materials,direct labour, and applied overhead).

a. What was the company’s bid price onthe Home Stores job?

b. What would the bid price have beenif departmental overhead rates had been used to apply overheadcost?

4. At the end of the year, the companyassembled the following actual cost data relating to alljobs worked on during the year:

	Department
	Cutting			Machining			Assembly			Total Plant
Direct material	$	827,500		$	97,500		$	440,000		$	1,365,000
Direct labour	$	350,000		$	232,500		$	364,000		$	946,500
Manufacturing overhead	$	612,500		$	918,900		$	98,500		$	1,629,900

a. Compute the underapplied oroverapplied overhead for the year, assuming that a plantwideoverhead rate is used.

b. Compute the underapplied oroverapplied overhead for the year, assuming that departmentaloverhead rates are used.