Job bid sheet, direct and sequential allocations (Appendix) Sanders Manufacturing LO 1, 2, 3, 8 Company produces electronic components on a job order basis. Most business is gained through bidding on jobs. Most firms competing with Sanders bid full cost plus a 30% markup. Recently, with the expectation of gaining more sales, Sanders dropped its markup from 40% to 30%. The company operates two service depart¬ ments and two production departments. Manufacturing support costs and normal activity levels for each department are given below.

Support costs of the personnel department are allocated on the basis of employ¬ ees and those of the maintenance department on the basis of maintenance hours. Departmental rates are used to assign costs to products. The machining department uses machine hours, and the assembly department uses direct labor hours for this purpose.
The firm is preparing to bid on a job 781 that requires three machine hours per unit produced in the machining department and five direct labor hours per unit produced in the assembly department. The expected direct materials and direct labor costs per unit are $450.
REQUIRED

(a) Allocate the service department costs to the production departments using the direct method.

(b) Determine the bid price per unit produced for job 781 using the direct method.

(c) Assume that the support costs of the service department incurring the greatest costs are allocated first, and allocate the service department costs to the pro¬ duction departments using the sequential method.

(d) Determine the bid price per unit produced for job 781 using the sequential method in (c).

SERVICE DEPARTMENT PRODUCTION DEPARTMENT Item Personnel Maintenance Machining Assembly Support costs $100,000 $200,000 $400,000 $300,000 Number of employees 5 5 5 40 Maintenance hours. 1,500 200 7,500 1,000 Machine hours 0 0 10,000 1,000 Direct labor hours 0 0 1,000 10,000