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 $250,000. During the past year, actual plantwide overhead was $240,000. 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) $ 150,000 $ 600,000 Actual department overhead 160,000 620,000 Expected activity: Direct labor hours 35,000 15,000 Machine-hours 10,000 40,000 Actual activity: Direct labor hours 51,000 9,000 Machine-hours 10,500 42,000 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 $ 25,000 Direct labor cost: Department A (2,000 hr) 45,000 Department B (500 hr) 10,000 Machine-hours projected: Department A 200 Department B 1,200 Units produced 10,000 Instructions:

A. A st. falls contractor has offered to produce the parts for job no. 110 for a price of $12 per unit. Assume the St. Falls sales force has already committed to the bidprice based on the calculation in part b. Should St. Fall's buy the $12 per unit part from the subcontractor or continue to make the parts for job no. 110 itself?

B. Would your response to part e change if the St. Falls plant could use the facilities necessary to produce parts necessary for job no. 110 for another job that could earn an incremental profit of $20,000?

C. If the subcontractor mentioned in part e is located in mexico, what additional international environmental issues, other than price, will Wilster and St. falls management need to evaluate?

D. If gilster company management decides to undertake a target costing approach to pricing its jobs, what types of changes will it need to make for such an approach to be successful?