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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 $ During the past year, actual plantwide overhead was $ Each departments overhead consists primarily of depreciation and other machinerelated 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 $ $
Actual department overhead
Expected total activity:
Direct labor hours
Machinehours
Actual activity:
Direct labor hours
Machinehours
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 are as follows:
Direct materials $
Direct labor cost:
Department A hours
Department B hours
Machinehours projected:
Department A
Department B
Units produced
c The sales policy at the Saint Cloud plant dictates that job bids be calculated by adding percent to total manufacturing costs. What would be the bid for job number using an overhead rate of $ per direct labor hour?
c The sales policy at the Saint Cloud plant dictates that job bids be calculated by adding percent to total manufacturing costs. What would be the bid for job number using the following three separate overhead rates based on machine hours?
Plantwide rate of $ per machine hour
Department A overhead rate of $ per machine hour
Department B overhead rate of $ per machine hour
c Which of the overhead allocation methods would you recommend?
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