Question
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
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 manager's salary, accounting personnel, cafeteria, and human resources, is budgeted at $360,000. During the past year, actual plantwide overhead was $348,000. Each department's 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) $ 149,500 $ 591,600 Actual department overhead 170,000 611,600 Expected total activity: Direct labor hours 46,000 25,000 Machine-hours 13,000 51,000 Actual activity: Direct labor hours 48,000 23,700 Machine-hours 13,800 53,000 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 only to job no. 110 are as follows. Direct materials $ 20,800 Direct labor cost: Department A (3,000 hr) 45,000 Department B (1,100 hr) 10,400 Machine-hours projected: Department A 210 Department B 1,200 Units produced 13,000 d. Using the allocation rates in part b, compute the under- or overapplied overhead for the St. Falls plant for the year. (Round your intermediate calculations to 2 decimal places.)
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