Reference no: EM13575198
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 $360,000. During the past year, actual plantwide overhead was $346,000. 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
- (excludes plantwide overhead) $ 134,400 $ 550,000
- Actual department overhead 162,000 570,000
- Expected activity:
- Direct labor hours 44,000 25,000
- Machine-hours 12,000 50,000
- Actual activity:
- Direct labor hours 46,500 23,600
- Machine-hours 12,800 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 $ 20,400
- Direct labor cost:
- Department A (2,800 hr) 42,000
- Department B (1,100 hr) 9,600
- Machine-hours projected:
- Department A 200
- Department B 1,200
- Units produced 12,000
- eBook Links (6)
a.1Assume the St. Falls plant uses a single plantwide overhead rate to assign all overhead (plantwide and department) costs to jobs. Find the overhead rate by using expected direct labor hours.
a.2Determine the projected amount of total manufacturing costs per unit for the units in job no. 110.
b.1Calculate plantwide overhead rate using Machine Hours on projected manufacturing costs for job no. 110.
Plantwide overhead rate $ per machine hour
b.2Calculate two separate department overhead rates using Machine Hours on projected manufacturing costs for job no. 110.
b.3Recalculate 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.
c.1The sales policy at St. Falls dictates that job bids be calculated by adding 24 percent to total manufacturing costs. What would be the bid for job no. 110 using the overhead rate from part a ?
c.2The sales policy at St. Falls dictates that job bids be calculated by adding 24 percent to total manufacturing costs. What would be the bid for job no. 110 using the overhead rate from part b ?