The Gilster Company, a machine tooling firm, has several plants. One plant, located in St. Falls, Minnesota, uses a job order costing system for its batch production processes. The St. Falls 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 $190,000. Each departments overhead consists primarily of depreciation and other machine-related expenses. Selected budgeted and actual data from the St. Falls plant for the past year are as follows:

Department A			Department B
Budgeted department overhead
(excludes plantwide overhead)	$	100,000		$	500,000
Actual department overhead		110,000			520,000
Expected activity:
Direct labor hours		50,000			10,000
Machine-hours		10,000			50,000
Actual activity:
Direct labor hours		51,000			9,000
Machine-hours		10,500			52,000

For the coming year, the accountants at St. Falls are in the process of helping the sales force create bids for several jobs. Projected data pertaining to job no. 110 are as follows:

Direct materials	$	20,000
Direct labor cost:
Department A (2,000 hr)		30,000
Department B (500 hr)		6,000
Machine-hours projected:
Department A		100
Department B		1,200
Units produced		10,000

Instructions (Round overhead rates and unit costs to 2 decimal places and round other cost calculations to the nearest dollar.)

a. Assume the St. Falls plant uses a single plantwide overhead rate to assign all overhead (plantwide and department) costs to jobs. Use expected direct labor hours to compute the overhead rate. Find the overhead rate and determine the projected amount of total manufacturing costs per unit for the units in job no. 110.

b. Recalculate the projected manufacturing costs for job no. 110 using three separate rates: one rate for plantwide overhead and two separate department overhead rates, all based on machine-hours.

c. The sales policy at St. Falls dictates that job bids be calculated by 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 ( 2 ) the overhead rate from part b ? Explain why the bids differ. Which of the overhead allocation methods would you recommend and why?