Mattawa Manufacturing Inc. has four categories of overhead. The expected overhead costs for each of the categories for the next year are as follows:

Currently, the company applies overhead using a predetermined overhead rate based upon budgeted direct labour hours of 100,000. The company has been asked to submit a bid on a pro- posed job. Usually bids are based upon full manufacturing costs plus a markup of 60 percent. Estimates for the proposed job are as follows:
Direct materials...............................................$30,000
Direct labour..................................................$24,000
Number of direct labour hours................................8,000
Number of material moves.......................................100
Number of inspections...........................................120
Number of setups..................................................24
Number of machine hours....................................4,000
Required:
1. If the company used activity-based cost drivers to assign overhead, calculate the bid price of the proposed job.
2. If the company used direct labour hours as the cost driver, calculate the bid price of the proposed job.

Transcribed Image Text:

Cost Driver Machine hours Material moves Setups Inspections Expected Activity 60,000 20,000 3,000 12,000 Costs Maintenance Materials handling $510,000 60,000 21,000 Setups Inspection