Please help me with d e and f
The Gilster Company, a machine tooling firm, has several plants. One a. Assume the St. Falls plant uses a single plantwide overhead rate plant, located in St. Falls, Minnesota, uses a job order costing system for its to assign all overhead (plantwide and department) costs to jobs. batch production processes. The St. Falls plant has two departments Use expected direct labor hours to compute the overhead rate. through which most jobs pass. Plantwide overhead, which includes the plant manager's salary, accounting personnel, cafeteria, and human Find the overhead rate and determine the projected amount of resources, is budgeted at $200,000. During the past year, actual plantwide total manufacturing costs per unit for the units in job no. 110. overhead was $190,000. Each department's overhead consists primarily of depreciation and other machine-related expenses. Selected budgeted and b. Recalculate the projected manufacturing costs for job no. 110 actual data from the St. Falls plant for the past year are as follows: using three separate rates: one rate for plantwide overhead and two separate department overhead rates, all based on machine-hours. Budgeted Department Overhead 100,000 500,000 (excludes plantwide overhead) c. The sales policy at St. Falls dictates that job bids be calculated by Actual Department Overhead 110,000 520,000 adding 30 percent to total manufacturing costs. What would be the bid for job no. 110 using ( 1 ) the overhead rate from part a and Expected Activity: ( 2 ) the overhead rate from part b ? Explain why the bids differ. Direct Labour Hours 50,000 10,000 Which of the overhead allocation methods would you recommend Machine Hours 10,000 50,000 and why? Actual Activity: Direct Labour Hours 51,000 9,000 d. Using the allocation rates in part b, compute the under- or Machine Hours 10,500 52,000 overapplied overhead for the St. Falls plant for the year. Explain the impact on net income of assigning the under- or overapplied For the coming year, the accountants at St. Falls are in the process of help- ing the sales force create bids for several jobs. Projected data pertaining overhead to cost of goods sold rather than prorating the amount to job no. 110 are as follows: between inventories and cost of goods sold. Direct Materials 20,000 e. A St. Falls subcontractor has offered to produce the parts for job no. 110 for a price of $8 per unit. Assume the St. Falls sales force Direct Labour Cost: has already committed to the bid price based on the calculations Department A (2,000 hr) 30.000 in part b. Should St. Falls buy the $8 per unit part from the Department B (500 hr) 6.000 subcontractor or continue to make the parts for job no. 110 itself? Machine Hours Projected: Department A f. Would your response to part e change if the St. Falls plant could 100 Department B 1,200 use the facilities necessary to produce parts for job no. 110 for another job that could earn an incremental profit of $15,000? Units Produced 10.000
