APPENDIX

$-07)$

Job bid and direct and sequential allocations Sanders Manufacturing 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 departments and two production departments. Manufacturing overhead costs and quantities of activities for each department are shown here:

Costs of the personnel department are allocated based on employees and those of the maintenance department based on maintenance hours. Departmental rates are used to assign overhead costs to

The firm is preparing to bid on job $781,$ which requires $3$ machine hours per unit produced in the machining department and $5$ direct labor hours per unit produced in the assembly department. The expected direct materials and direct labor costs per unit are $$450.$

Required

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

$($c$)$ Assume that the costs of the sertment costs to the production department cost are allocated first, tial method. When allocating personnel costs, assume the maintenance using the sequenemployees.

$($d$)$ Determine the bid price per unit produced for job $781$ using the seque

Service departments

Duerhead costs

Allocation of:

Maintenance

Personnel

Total oost after allocation

Duerhead allocation rates:

Machine hours

Direct labor hours

Duerhead rate

Sellingprice afint $781$

Direot material and labor cost

Machine hours

Machining departmentrate

Labor hours

Assembly department rate

Total cost

$30\%$ markup on cost

Selling price of job $781$

$(7\mathrm{.}500110\mathrm{.}0001,000110,000)$

$(5/45)40145$