The Gilster Company, a machine tooling firm, has several plants. One plant, located in St. Falls, Minnesota, uses a job order costing system for its batch production processes. The St. Falls plant has two departments through which most jobs pass. Plantwide overhead, which includes the plant manager's salary, accounting personnel, cafeteria, and human resources, is budgeted at $250,000. During the past year, actual plantwide overhead was $236,000.

Each department's overhead consists primarily of depreciation and other machine-related expenses. Selected budgeted and actual data from the St. Falls plant for the past year are as follows: Department A Department B Budgeted department overhead $ 140,000 $ 625,000 Actual department overhead 156,000 643,000 Expected activity: Direct labor hours 50,000 15,000 Machine-hours 10,000 50,000 Actual activity: Direct labor hours 51,000 13,000 Machine-hours 10,700 52,000 For the coming year, the accountants at St. Falls are in the process of helping the sales force create bids for several jobs. Projected data pertaining to job no.

110 are as follows: Direct materials $ 20,000 Direct labor cost: Department A36,000 Department B  9,200 Machine-hours projected: Department A 140 Department B 1,200 Units produced 9,000 eBook Links (6) 1.value: 10.00 points a.1 Assume the St. Falls plant uses a single plantwide overhead rate to assign all overhead costs to jobs. Find the overhead rate by using expected direct labor hours. Overhead rate $ per direct labor hour a.2 Determine the projected amount of total manufacturing costs per unit for the units in job no. 110.

Manufacturing costs for Job 110 $ per unit check my workreferences 2.value: 10.00 points b.1 Calculate plantwide overhead rate using Machine Hours on projected manufacturing costs for job no. 110. Plantwide overhead rate $ per machine hour b.2 Calculate two separate department overhead rates using Machine Hours on projected manufacturing costs for job no. 110. Overhead rate-Department A $ per machine hour Overhead rate-Department B $ per machine hour b.3 Recalculate the projected manufacturing costs for job no. 110 using three separate rates: one rate for plantwide overhead and two separate department overhead rates, all based on machine-hours. Total cost $ per unit check my workreferences 3.value: 10.00 points c.1 The sales policy at St. Falls dictates that job bids be calculated by adding 20 percent to total manufacturing costs. What would be the bid for job no. 110 using the overhead rate from part a ?

Bid price $ c.2 The sales policy at St. Falls dictates that job bids be calculated by adding 20 percent to total manufacturing costs. What would be the bid for job no. 110 using the overhead rate from part b ? Bid price $ c.3 Which of the overhead allocation methods would you recommend ? Overhead rate by direct labor hours Overhead rate by machine Hours check my workreferences 4.value: 10.00 points d. Using the allocation rates in part b, compute the under- or overapplied overhead for the St. Falls plant for the year.$ check my workreferences 5.value: 10.00 points e.

A St. Falls subcontractor has offered to produce the parts for job no. 110 for a price of $10 per unit. Assume the St. Falls sales force has already committed to the bid price based on the calculations in part b. Should St. Falls buy the $10 per unit part from the subcontractor or continue to make the parts for job no. 110 itself? Continue to make the part Subcontractor check my workreferences 6.value: 10.00 points f. Would your response to part e change if the St. Falls plant could use the facilities necessary to produce parts for job no. 110 for another job that could earn an incremental profit of $21,000? Yes No check my workreferences ©2011 The McGraw-Hill Companies. All rights reserved.