High-End Lifts uses a volume-based, plant-wide approach to allocating overhead. They use direct-labor hours as the cost driver for determining the budgeted rate. You will need to derive the predetermined overhead rate for them. First few images are information for the actual problems. Please help!!

Challenge 2: Job-Order Costing for Customized Work Based on your advice, High-End Lifts has moved forward and set up the production process to build all of its residential elevators in- house. In the past, High-End Lifts utilized the cost estimates provided by the production company as the basis for quoting prices to its residential customers and did not bear the risk of cost overruns or manufacturing delays. Now that they are manufacturing products, they need a more sophisticated system for estimating costs, bidding on jobs, and tracking actuals against budgeted costs for planning and control purposes. They've asked for your help in setting up a system to quote and track the cost of custom jobs that are received for custom projects. You've recommended the use of a job order costing system since each job is budgeted and track based on customized speci cifications. Suggested Preparation: Use the Challenge 2 Workbook (found in "Resources" to complete the definitions related to the job ordering costing. Watch the videos to gain a stronger understanding of the concepts. Task 1: Calculate a predetermined overhead application rate using budgeted direct-labor hours as the cost driver. High-End Lifts uses a volume-based, plant-wide approach to allocating overhead. They use direct-labor hours as the cost driver for determining the budgeted rate Task 2: High-End Lifts received a request for proposal (RFP #240A) from Top Quality Builders, Inc. to manufacturer 6 custom-sized elevators for a small condominium project in Lake Bonaventure, NY for delivery on 10-1-18 (installation is not required). High-End Lifts has the in-house capacity to complete the job without incurring additional overhead costs. Required: 1) Determine the price and bid the job as specified in the RFP #240A. The RFP has specified that the bid include the cost of delivering the units to the construction site. High-End Lifts, Inc. has estimated that the delivery expense for the six elevators including insurance while in transit, is $1,500. This amount will be figured into the total cost of the bid, after accounting for the mark-up on cost. High-End Lifts, Inc. is aware that one of its competitiors is also bidding on the job. To compete, High-End Lifts wants to price the job at 40% gross margin rather than their standard 50% on the regular product line-up. Standard limited warranty on all High-End elevators is 5 years, parts and labor related to all power and hydraulic lift components. These elevators are slightly larger than the residential elevators they normally build and based on their estimates, these units will require 10% more in direct materials and 15% more in direct labor hours than their standard elevators. THe standard costs on the regular elevators are $55,000 for direct materials and 568,750 for direct labor which is based on an average of 400 hours per elevaton For the new units, manufacturing overhead will be budgeted using the pre-determined overhead rate calcualted in Task #1. For pricing the job, High-End Lifts will use the pre-determined overhead rate x the budgeted direct labor hours for the job 2) They've asked you to help write a proposal to bid on the job. Draft a proposal letter to Mike Bower at Top Quality Builders, Inc., 100 West 1st Street, Oswego, NY. In the letter, write a brief summary of the company, High-End Lifts, Inc., what you want to help the prospect accomplish, a timeline for getting the work done, pricing, warranty information and contact information. High-End Lifts, Inc. is located at 1001 James Street, Syracuse, NY 13111, the CEOs name is Skylar Cab, and the business cell number is 315-555-1234 Task 3: High-End Lifts was awarded the job from Top Quality Builders to manufacture the 6 custom-sized elevators. Through further negotiations, High-End Lifts agreed to a price of $225,000 per unit. High-End Lifts actual direct materials were higher than expected and averaged $61,000 per unit but direct labor costs were less than expected. The average # of hours per week was 265 hours (approximately 4% less than expected) for a total of 2,650 hours. For tracking actual costs, High-End Lifts applied MOH using the pre- determined overhead rate x the actual direct labor hours incurred for the job. Complete the job cost record (complete the yellow areas). The job was started on 7/16/18 and was assigned the code A1. Task 4: Compare the budgeted to actual results and calculate the variance amounts. Write an interoffice memo addressed to Skylar Cab, CEO, from Patty Proof, VP of Manufacturing, that summarizes the financial outcome of the job. Use the information from the variance analysis to support your findings. Post the memo on the discussion board and discuss the results with peers. Address the following points in the letter: 1) the difference in the price and why it exists, 2) the difference in the materials, labor and overhead and why it exists, and 3) the overall conclusions regarding the profitability of the job. Did they make a profit? Top Quality Builders, Inc. Top Quality Builders, inc. 100 West 1st Street Oswego, NY 13126 RFP Nature of Project: 6 custom-sized elevators for a condominium project to be built per the project specifications. Proposals must conform to the following specifications: 1. Maximum 48" excavation below ground floor level, contained within footprint of elevator 2. Overhead mechanicals must be contained within footprint of elevator 3. Operable on single phase, 240-volt AC power 4. Pneumatics will not be considered; must be mechanical lift system 5. Each unit will be a three-floor, three-stop elevator with call buttons on each floor 6. Control systems must provide for handicapped accessibility per relevant provisions of Americans with Disabilities Act. Required Delivery Date: 10-1-18 at job site, uninstalled, Lake Bonaventure, NY Proposal Due Date: 3-15-18 Evaluation and Award Date: 6-1-18 Please respond to this proposal on or before the due date of 3-15-18 to be considered for this project. All bids and submitted materials will remain confidential during and after this process. Please let me know if you have any questions regarding the RFP requirements. Sincerely, Mike Bower Owner & Operator of Top Quality Builders, Inc. TASK #1 PDOHR HIGH-END LIFTS BUDGETED MOH 57,333 Depreciation on PP&IE 48,000 Property Taxes 32,777 Utilities 65,000 Insurance 117,200 Indirect labor & benefits 53,140 Indirect materials 373,450 TOTAL BUDGETED MOH BUDGETED DIRECT LABOR HOURS $ 1,890,625 TOTAL BUDGETED COST OF DL ($68,750 x 27.5 units) 11,000 TOTAL BUDGETED DL HOURS: 27.5 units x 5 workers x 2 weeks x 40 hours per week (400 hours per elev 171.88 DL$ per hour $ PREDETERMINED MOH RATE TOTAL BUDGETED MOH TOTAL BUDGETED DL HOURS Predetermined MOH Rate per DLH = Total Budgeted MOH / Total Budgeted DLH TASK #2 PROPOSAL Budgeted Cost Info Per Unit Total Cost per Per Unit DM Costs DL Costs DL Hours Standard Cost Increase Unit 55,000 68,750 400 10% 15% 15% $ $ 60,500 79,063 460 Budget Summary for Pricing RFP #240A Direct Material Costs Direct Labor Costs Manufacturing Overhead Applied Total Cost per Unit Total Cost for Six Units Price: Markup 40% Gross Margin Freight & Insurance (Selling Expense, period cost) Total Bid DIRECTIONS: E9 is above E10 is above E11 = E6 X TASK #2 CELL B20 (this is applied overhead) E12 is the sum of DM, DL and MOH E13 = 6 x total cost per unit; F13-E13/E14 E14 = E13/.60 E15 = 1500 GIVEN IN PROBLEM Check E16 $1,553,295 TASK #3 JOB COST RECORD ACTUAL JOB-COST RECORD Job Number: A1 Description: RFP From Top Quality Builders: Expected Date of10/1YEAR 3 Completion: Number of Units: Manufacture 6 Elevators for Condominium Project In St. Bonaventure, NY Direct Material Requisition Date Unit Price Cost 7/16/2018 8/20/2018 101 120 E13 AND E14 GIVEN IN PROBLEM (ACTUAL COST PER UNIT) Check: F13 $183,000 Check: F16 5366,000 Totals Direct Labor Time Card Date Rate Cost 7/20/18 7/27/2018 8/3/2018 8/10/2018 8/17/2018 8/24/2018 8/31/2018 9/7/2018 9/14/2018 9/28/2018 171.88 171.88 171.88 171.88 171.88 171.88 171.88 171.88 171.88 171.88 D20 THROUGH D29 (GIVEN IN PROBLEM AT 265) Check D31 2650 Check F31 $455,468.75 A1 A2 A4 A5 S1 S2 S3 Totals Manufacturing Overhead Date Activity Base DLH DLH DLH Quantity Application Rate Cost 7/31/2018 8/31/2018 9/30/2018 Check F39 $89,968 Totals Cost Summar Cost Item Total Direct Materials Total Direct Labor Total Manufacturing Overhead Total Cost Unit Cost answers from above (use cell referencing Shipping Summary Date Units Shipped Units Remaining in Inventory Cost Balance 10/1/2018 Check: F51 zero E56 GIVEN IN PROBLEM 57 F47 E58 E56 E57 Profitability Summary Date Units S per Unit Total Bid E59 E58/ E56 10/1/2018 Actual Price Cost Gross Profit Gross Margin Check: F59 32.5% TASK #4 VARIANCE ANALYSIS: BUDGET VERSUS ACTUAL Job A1 Budgeted Actual Variance Sales Price Analysis Sales Price Product Costs: Direct Materials Direct Labor MOH Applied Total Product Costs Gross Profit Gross Margin % C5 = TASK #2 CELL E14/6; D5 = GIVEN; CELL E5 = D5-C5 C7 = TASK #2 CELL E4; D7 GIVEN; CELL E7 = C7-D7 C8-TASK #2 CELL E5; D8-TASK #3 CELL F31/6; CELL E8-C8-D8 C9-TASK #2 CELL E6 x Task # 1 Cell B20; D9 = TASK #3 CELL F39/6; CELL E9-C9-D9 Check C10 = $155,180 Check E12 -7.5% INTEROFFICE MEMO: Summarize the outcome: To: Skylar Cab, CEO From: Patty Proof, VP Manufacturing Date: 10-15 Year 3 Re: Profitability report on Job A1 Task # 1 PDOHR Task #2 Proposal Task #3 Job Cost Record Task #4 Budget Versus Actual s