# Question & Answer: Bender Automotive Works manufactures a variety of front end assemblies for cars. Bend…..

Bender Automotive Works manufactures a variety of front end assemblies for cars. Bender has three producing departments: Drilling. Assembly and Cutting. Three support departments provide support for Bender’s producing departments: Human Resources (H.R.), Maintenance, and Utilities. Budgeted data for the coming quarter follow: The predetermined overhead rate for Drilling and Cutting is computed on the basis of machine hours. Direct Labor hours are used to determine the overhead rate for Assembly. A manufacturer recently requested a bid on a three-year contract that would supply one model of front-end assemblies to a nearby factory. The prime costs (direct materials and direct labor) for a batch of this model are \$2,000. It takes three machine hours of drilling and two machine hours of cutting to produce a batch of this model. 30 direct labor hours are required to assemble a batch in the assembly department. Bender’s policy is to bid full manufacturing cost, plus 15 percent. (Round allocation ratios to 4 decimal places, allocated support department costs to the nearest dollar, and the job cost components to the nearest cent.) Required: A) Using the Direct Method, determine the allocation ratios for Support Department costs and prepare a schedule of overhead costs for each Producing Department. B) Based on (A), calculate the overhead rate for each Producing Department. C) Using your results from part (B) along with the prime costs given, prepare a bid for a batch of front end assemblies (schedule of cost components plus the mark up). The components should include prime costs and overhead costs from each producing department. D) Using the Sequential Method, determine the allocation ratios for Support Department costs and prepare a schedule of overhead costs for each Producing Department. The order should be Maintenance first, then Utilities, then H.R. E) Based on (D), calculate the overhead rate for each Producing Department. F) Using your results from part (E) along with the prime costs given, prepare a bid for a batch of front end assemblies (schedule of cost components plus the mark-up). The components should include prime costs and overhead costs from each producing department.