Sawmill:
Joint manufacturing costs: $900,000
	Grade	Quantity Produced (board feet)				Price at Split-Off (per 1,000 board foot)
	Firsts and seconds		1,500,000				$300
	No. 1 common		3,000,000				225
	No. 2 common		1,875,000				140
	No. 3 common		1,125,000				100
	Total		7,500,000

Fabric Plant:
Budgeted overhead: $1,200,000 (50% fixed) Practical volume (direct labor hours): 120,000 hours Actual overhead: $1,150,000 (50% fixed) Actual hours worked:
	Grade	Weaving and Pattern				Coloring and Bolting			Total
	Fabric FB60		20,000				12,000			32,000
	Fabric FB70		28,000				14,000			42,000
	Fabric FB80		26,000				18,000			44,000
	Total		74,000				44,000			118,000

Departmental data on Fabric FB70 (actual costs and actual outcomes):

	Weaving and Pattern			Coloring and Bolting
Beginning inventories
Units*		20,000			400
Costs:
Transferred in		$0			$100,000
Materials		$80,000			$8,000
Labor		$18,000			$6,600
Overhead		$22,000			$9,000
Current production:
Units started		80,000			?
Units transferred out		80,000			3,200
Costs:
Transferred in		$0			?
Materials		$320,000			$82,000
Labor		$208,000			$99,400
Overhead		?			?
Percentage completion:
Beginning inventory		30%			40%
Ending inventory		40%			50%

*Units are measured in yards for the Weaving and Pattern Department and in bolts for the Coloring and Bolting Department. Note: With the exception of the cardboard bolt rods, materials are added at the beginning of each process. The cost of the rods is relatively insignificant and is included in overhead.

Proposed standard cost sheet for Fabric FB70 (for the Coloring and Bolting Department only):

Transferred-in materials (25 yards @ $10)		$250.00
Other materials (100 ounces @ $0.20)		20.00
Labor (3.1 hours @ $8)		24.80
Fixed overhead (3.1 hours @ $5)		15.50
Variable overhead (3.1 hours @ $5)		15.50
Standard cost per unit		$325.80

Furniture Plant:
Departmental data (budgeted):
	Service Departments										Producing Departments
	Receiving		Power			Maintenance			General Factory			Cutting			Assembly
Overhead		$450,000		$600,000			$300,000			$525,000			$750,000			$375,000
Machine hours		-		-			-			-			60,000			15,000
Receiving orders		-		-			-			-			13,500			9,000
Square feet		1,000		5,000			4,000			-			15,000			10,000
Direct labor hours		-		-			-			-			50,000			200,000

After some discussion with the furniture plant controller, Gisela decided to use machine hours to calculate the overhead rate for the Cutting Department and direct labor hours for the Assembly Department rate (the Cutting Department was more automated than the Assembly Department). As part of her report, she wanted to compare the effects of plantwide rates and departmental rates on the cost of jobs. She wanted to know if overhead costing could be the source of the pricing problems the company was experiencing.

To assess the effect of the different overhead assignment procedures, Gisela decided to examine two prospective jobs. One job, Job A500, could produce 500 sofas, using a frequently requested style and Fabric FB70. Bids on this type of job were being lost more frequently to competitors. The second job, Job B75, would produce 75 specially designed recliners. This job involved a new design and was more difficult for the workers to build. It involved some special cutting requirements and an unfamiliar assembly. Recently, the company seemed to be winning more bids on jobs of this type. To compute the costs of the two jobs, Gisela assembled the following information on the two jobs:

Job A500:
	Direct materials:
	Fabric FB70		180 bolts @ $350
	Lumber (No. 1 common)		20,000 board feet @ $0.12
	Other components		$26,600
	Direct labor:
	Cutting Department		400 hours @ $10
	Assembly Department		1,600 hours @ $8.75
	Machine time:
	Cutting Department		350 machine hours
	Assembly Department		50 machine hours
Job B75:
	Direct materials:
	Fabric FB70		26 yards @ $350
	Lumber (first and seconds)		2,200 board feet @ $0.12
	Other components		$3,236
	Direct labor:
	Cutting Department		70 hours @ $10
	Assembly Department		240 hours @ $8.75
	Machine time:
	Cutting Department		90 machine hours
	Assembly Department		15 machine hours

4. Using the weighted average method, calculate the cost per bolt for Fabric FB70.