Company The Tool Company, a machine tooling firm, has several plants. One plant, located in Cleveland, Ohio, uses a job order costing system for its batch production processes. The Cleveland plact has 2 departments through which most jobs pass. Plant-wide overhead, which includes the plant manager's salary, accounting personinel, cafeteria, and human resources, is budgeted at $250,000. During the past vear, actual plant-wide overhead was $240,000. Each department's overthead consists primarily of depreciation and other machine-related expenses, Selected budgeted and actual data from the Cleveland plant fer the past year are as follows: Expected total activity: Direct labor hes For the coming wear, the accountants at the Cleveland plant are in the process of helping the sales force create bids for several jobs. Projected data pertaining enly to job w110 are as follows: 1. A Cleveland contracter has offered to produce the parts for job w110 for a price of $12 per unc. Assume the Cleveland sales force has already committed to the bid price based on the calculations from 2. Should the Cleveland plants buy the $12 per unit part trom the subcomractor or continue to make the parts for job u110 itself? 1. Would your response to as change if the cleveland plant could use the facilities necessary to prodace parts for job $110 for another job that could earn an incremental profit of $20,000 ? 2. If the subxontractor mentioned in a 5 is located in Mexico, what additional international environmental issues, other than price, will manadememt at the Cleveland plant need to evaluate? 3. If Tool Company management decides to undertake a target costing approach to pricine its jobs, what types of changes will it need to make for pach an approach to be successfullt Company The Tool Company, a machine tooling firm, has several plants. One plant, located in Cleveland, Ohio, uses a job order costing system for its batch production processes. The Cleveland plact has 2 departments through which most jobs pass. Plant-wide overhead, which includes the plant manager's salary, accounting personinel, cafeteria, and human resources, is budgeted at $250,000. During the past vear, actual plant-wide overhead was $240,000. Each department's overthead consists primarily of depreciation and other machine-related expenses, Selected budgeted and actual data from the Cleveland plant fer the past year are as follows: Expected total activity: Direct labor hes For the coming wear, the accountants at the Cleveland plant are in the process of helping the sales force create bids for several jobs. Projected data pertaining enly to job w110 are as follows: 1. A Cleveland contracter has offered to produce the parts for job w110 for a price of $12 per unc. Assume the Cleveland sales force has already committed to the bid price based on the calculations from 2. Should the Cleveland plants buy the $12 per unit part trom the subcomractor or continue to make the parts for job u110 itself? 1. Would your response to as change if the cleveland plant could use the facilities necessary to prodace parts for job $110 for another job that could earn an incremental profit of $20,000 ? 2. If the subxontractor mentioned in a 5 is located in Mexico, what additional international environmental issues, other than price, will manadememt at the Cleveland plant need to evaluate? 3. If Tool Company management decides to undertake a target costing approach to pricine its jobs, what types of changes will it need to make for pach an approach to be successfullt
