Reference no: EM132847231
Problem - The Gilster Company, a machine tooling firm, has several plants. One plant, located in St. Cloud, Minnesota, uses a job order costing system for its batch production processes. The St. Cloud plant has two departments through which most jobs pass. Plant-wide overhead, which includes the plant manager's salary, accounting personnel, cafeteria, and human resources, is budgeted at $200,000. During the past year, actual plant-wide overhead was $185,000. Each department's overhead consists primarily of depreciation and other machine-related expenses. Selected budgeted and actual data from the St. Cloud plant for the past year are as follows.
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Department A
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Department B
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Budgeted department overhead (excludes plant-wide overhead)
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$196,000
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$559,000
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Actual department overhead
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142,000
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574,000
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Expected total activity:
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Direct labor hours
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36,000
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10,000
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Machine-hours
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14,000
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43,000
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Actual activity:
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Direct labor hours
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38,500
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9,400
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Machine-hours
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14,500
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45,000
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For the coming year, the accountants at the St. Cloud plant are in the process of helping the sales force create bids for several jobs. Projected data pertaining only to job no. 110 are as follows.
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Direct materials
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$16,500
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Direct labor cost:
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Department A (2,000 hr)
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30,000
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Department B (500 hr)
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10,000
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Machine-hours projected:
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Department A
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140
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Department B
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1,200
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Units produced
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10,000
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Required -
a-1. Assume the St. Cloud plant uses a single plant-wide overhead rate to assign all overhead (plant-wide and department) costs to jobs. Use expected total direct labor hours to compute the overhead rate.
a-2. What is the expected cost per unit produced for job no. 110?