For each of the overhead rates computed in Requirement 9, calculate unit bid prices for Jobs A500 and B75. Assume that the company's aggressive bidding policy is unit cost plus 50 percent. Did departmental overhead rates have any effect on Beauville's winning or losing bids? What recommendation would you make? 

Explain. Now, adjust the costs and bids for departmental rate bids using the proposed standard costs for the Coloring and Bolting Department. Did this make a difference? 

What does this tell you?

 

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Fabric Plant: Budgeted overhead: $1,200,000 (50% fixed) Practical volume (direct labor hours): 120,000 hours Actual overhead: $1,150,000 (50% fixed) Actual hours worked: Grade Weaving and Coloring and Total Pattern Bolting Fabric FB60 20,000 12,000 32,000 Fabric FB70 28,000 14,000 42,000 Fabric FB80 26,000 18,000 44,000 Total 74,000 44,000 118,000 Departmental data on Fabric FB70 (actual costs and actual outcomes): Weaving and Pattern Coloring and Bolting Beginning inventories Units 20,000 400 Costs: Transferred in So Materials $80,000 $100,000 $8,000 Labor Overhead $18,000 $6,600 $22,000 $9,000 Current production: Units started 80,000 ? Units transferred out 80,000 3,200 Costs: Transferred in Materials Labor Overhead So ? $320,000 $82,000 $208,000 $99,400 ? ? Percentage completion: Beginning inventory Ending inventory 30% 4096 40% 50% *Units are measured in yards for the Weaving and Pattern Department and in bolts for the Coloring and Bolting Department. Note: With the exception of the cardboard bolt rods, materials are added at the beginning of each process. The cost of the rods is relatively insignificant and is included in overhead. Fabric Plant: Budgeted overhead: $1,200,000 (50% fixed) Practical volume (direct labor hours): 120,000 hours Actual overhead: $1,150,000 (50% fixed) Actual hours worked: Grade Weaving and Coloring and Total Pattern Bolting Fabric FB60 20,000 12,000 32,000 Fabric FB70 28,000 14,000 42,000 Fabric FB80 26,000 18,000 44,000 Total 74,000 44,000 118,000 Departmental data on Fabric FB70 (actual costs and actual outcomes): Weaving and Pattern Coloring and Bolting Beginning inventories Units 20,000 400 Costs: Transferred in So Materials $80,000 $100,000 $8,000 Labor Overhead $18,000 $6,600 $22,000 $9,000 Current production: Units started 80,000 ? Units transferred out 80,000 3,200 Costs: Transferred in Materials Labor Overhead So ? $320,000 $82,000 $208,000 $99,400 ? ? Percentage completion: Beginning inventory Ending inventory 30% 4096 40% 50% *Units are measured in yards for the Weaving and Pattern Department and in bolts for the Coloring and Bolting Department. Note: With the exception of the cardboard bolt rods, materials are added at the beginning of each process. The cost of the rods is relatively insignificant and is included in overhead.