Decision making with job order costs OBJ. 3 Raneri Trophies Inc. uses a job order cost system for determining the cost to manufacture award products (plaques and trophies). Among the company’s products is an engraved plaque that is awarded to participants who complete a training program at a local business. The company sells the plaques to the local business for $80 each.

Each plaque has a brass plate engraved with the name of the participant. Engraving requires approximately 30 minutes per name. Improperly engraved names must be redone. The plate is screwed to a walnut backboard. This assembly takes approximately 15 minutes per unit. Improper assembly must be redone using a new walnut backboard.

During the first half of the year, Raneri had two separate plaque orders. The job cost sheets for the two separate jobs indicated the following information:
Job 101 May 4 Cost per Unit Units Job Cost Direct materials:
Wood $20/unit 40 units $ 800 Brass 15/unit 40 units 600 Engraving labor 20/hr. 20 hrs. 400 Assembly labor 30/hr. 10 hrs. 300 Factory overhead 10/hr. 30 hrs. 300 $2,400 Plaques shipped ÷ 40 Cost per plaque $ 60 Job 105 June 10 Cost per Unit Units Job Cost Direct materials:
Wood $20/unit 34 units $ 680 Brass 15/unit 34 units 510 Engraving labor 20/hr. 17 hrs. 340 Assembly labor 30/hr. 8.5 hrs. 255 Factory overhead 10/hr. 25.5 hrs. 255 $2,040 Plaques shipped ÷ 30 Cost per plaque $ 68

a. Why did the cost per plaque increase from $60 to $68?

b. What improvements would you recommend for Raneri Trophies Inc.?