Bender Automotive Works Inc. manufactures a variety of front-end assemblies for automobiles. A front-end assembly is the unified front of an automobile that includes the headlamps, fender, and surrounding metal/plastic. Bender has two producing departments: Drilling and Assembly. Usually, the front-end assemblies are ordered in batches of 100.

Two support departments provide support for Bender's operating units: Maintenance and Power. Budgeted data for the coming quarter follow. The company does not separate fixed and variable costs.

The predetermined overhead rate for Drilling is computed on the basis of machine hours; direct labor hours are used for Assembly. Recently, a truck manufacturer requested a bid on a three-year contract that would supply front-end assemblies to a nearby factory. The prime costs for a batch of 100 frontend assemblies are $1,817. It takes two machine hours to produce a batch in the drilling department and 50 direct labor hours to assemble the 100 front-end assemblies in the assembly department. Bender's policy is to bid full manufacturing cost, plus 15 percent.

Required:
1. Prepare bids for Bender Automotive Works by using each of the following allocation methods:
a. Direct method.
b. Sequential method.
2. Which method most accurately reflects the cost of producing the front-endassemblies?

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Producing Departments Assembly $ 90,000 7,500 324,000 40,000 Support Departments Maintenance Power Drilling Overhead costs Machine hours Kilowatt-hours Direct labor hours $163,000 30,000 36,000 5,000 $320,000 $400,000 22,500 40,000