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The Gilster Company, a machine tooling firm, has several plants. One plant, located in St. Cloud, Minnesota, uses a job order costing system for
The Gilster Company, a machine tooling firm, has several plants. One plant, located in St. Cloud, Minnesota, 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 $340,000. 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) Actual department overhead Expected total activity: Direct labor hours Machine-hours Actual activity: Direct labor hours Machine-hours Department A Department B $ 100,000 $ 282,000 120,000 302,000 38,000 20,000 20,000 47,000 39,000 18,700 20,800 49,000 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. 110 are as follows. Direct materials $25,000 Direct labor cost: Department A (2,800 hr) 42,000 Department B (1,500 hr) 14,000 Machine-hours projected: Department A 170 Department B Units produced 1,200 9,000 c-1. The sales policy at the St. Cloud plant dictates that job bids be calculated by adding 30 percent to total manufacturing costs. What would be the bid for job no. 110 using the overhead rate from part a? c-2. The sales policy at the St. Cloud plant dictates that job bids be calculated by adding 30 percent to total manufacturing costs. What would be the bid for job no. 110 using the overhead rate from part b? c-3. Which of the overhead allocation methods would you recommend? Complete this
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