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Overhead Rates, Unit Costs Folsom Company manufactures specialty tools to customer order. There are three producing departments. Departmental information on budgeted overhead and various activit measures for the coming year is as follows Welding Assembly Finishing $220,000 $62,000 $150,000 Estimated overhead Direct labor hours 4,500 10,000 6,000 $90,000 $150,000 $120,000 Direct labor cost Machine hours 5,000 1,000 2,000 Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, Janine, the controller, has been wondering whether it might be worthwhile to use departmental overhead rates. She has analyzed the overhead costs and drivers for the various departments and decided that Welding and Finishing should base their overhead rates on machine hours and that Assembly should base its overhead rate on direct labor hours. Janine has been asked to prepare bids for two jobs with the following information: Job 1 Job 2 $6,725 $9,340 Direct materials $1,800 $3,100 Direct labor cost Direct labor hours: Welding 20 10 60 20 Assembly Finishing 20 70 Number of machine hours: Welding 50 50 60 Assembly Finishing 125 90 The typical bid price includes a 35% markup over full manufacturing cost Overhead Rates, Unit Costs Folsom Company manufactures specialty tools to customer order. There are three producing departments. Departmental information on budgeted overhead and various activit measures for the coming year is as follows Welding Assembly Finishing $220,000 $62,000 $150,000 Estimated overhead Direct labor hours 4,500 10,000 6,000 $90,000 $150,000 $120,000 Direct labor cost Machine hours 5,000 1,000 2,000 Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, Janine, the controller, has been wondering whether it might be worthwhile to use departmental overhead rates. She has analyzed the overhead costs and drivers for the various departments and decided that Welding and Finishing should base their overhead rates on machine hours and that Assembly should base its overhead rate on direct labor hours. Janine has been asked to prepare bids for two jobs with the following information: Job 1 Job 2 $6,725 $9,340 Direct materials $1,800 $3,100 Direct labor cost Direct labor hours: Welding 20 10 60 20 Assembly Finishing 20 70 Number of machine hours: Welding 50 50 60 Assembly Finishing 125 90 The typical bid price includes a 35% markup over full manufacturing cost

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