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Jasper Company, a machine tooling firm, has several plants. One plant, located in Saint Cloud, Minnesota, uses a job order costing system for its batch

Jasper Company, a machine tooling firm, has several plants. One plant, located in Saint Cloud, Minnesota, uses a job order costing system for its batch production processes. The Saint Cloud plant has two departments through which most jobs pass. Plantwide overhead, which includes the plant managers salary, accounting personnel, cafeteria, and human resources, is budgeted at $200,000. During the past year, actual plantwide overhead was $183,000. Each departments overhead consists primarily of depreciation and other machine-related expenses. Selected budgeted and actual data from the Saint Cloud plant for the past year are as follows:
Department A Department B
Budgeted department overhead (excludes plantwide overhead) $ 120,000 $ 308,000
Actual department overhead 125,000323,000
Expected total activity:
Direct labor hours 38,00010,000
Machine-hours 15,00044,000
Actual activity:
Direct labor hours 40,0008,600
Machine-hours 15,50046,000
For the coming year, the accountants at the Saint Cloud plant are in the process of helping the salesforce create bids for several jobs. Projected data pertaining only to job number 110 are as follows:
Direct materials $ 17,000
Direct labor cost:
Department A (2,200 hours)33,000
Department B (500 hours)11,000
Machine-hours projected:
Department A 150
Department B 1,200
Units produced 11,000
f. A Saint Cloud subcontractor has offered to produce the parts for job number 110 for a price of $7.5 per unit. Assume the Saint Cloud sales force has already committed to the bid price of $75,176.50. Compute incremental cost (benefit) to make if the Saint Cloud plant could use the facilities necessary to produce parts for job number 110 for another job that could earn an incremental profit of $17,000? Assume the Saint Cloud plant uses three separate overhead rates to assign overhead costs to jobs based on machine hours.

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