The Company, a machine tooling firm, has several plants. One plant, located in St. Cloud, Florida uses a job order costing system for its batch production processes. The St. Cloud plant has two departments through which most jobs pass. Plant-wide overhead, which includes the plant manager's salary, accounting personnel, cafeteria, and human resources, is budgeted at $360,000. During the past year, actual plantwide overhead was $342,000. Each department's overhead consists primarily of depreciation and other machine-related expenses. Selected budgeted and actual data from the St. Cloud plant for the past year are as follows.

Budgeted department overhead(excludes plantwide overhead)

Department A$110,000

Department B $480,000

Actual department overhead

Department A 144,000

Department B 500,000

Expectedtotalactivity:

Direct labor hours Department A40,000Department B 20,000

Machine-hoursDepartment A 10,000Department B48,000

Actual activity:

Direct labor hoursDepartment A 40,500Department B 18,900

Machine-hoursDepartment A 10,800Department B50,000

For the coming year, the accountants at the St. Cloud plant are in the process of helping the sales force create bids for several jobs. Projected data pertaining only to job no. 120

Direct materials$25,500

Direct labor cost:Department A (2,800 hr)42,000Department B (1,500 hr)8,000

Machine-hours projected:Department A180Department B1,200

Units produced10,000

1) By Policy job bids be calculated by adding 22 percent to total manufacturing costs. What would be the bid for job no. 120 using the overhead rate from part a?

2) By policy St. Cloud plant dictates that job bids be calculated by adding 22 percent to total manufacturing costs. What would be the bid for job no. 120 using the overhead rate from part b?

3)Which of the overhead allocation methods would you recommend?