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 $200,000. During the past year, actual plantwide overhead was $190,000. 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: 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: Instructions (Round overhead rates and unit costs to 2 decimal places and round other cost calculations to the nearest dollar.) Based on your previous findings in Formative Assessment 1 \& 2 answer the following: a. If the subcontractor mentioned in part e (Formative Assessment 2) is located in Mexico, what additional international environmental issues, other than price, will Gilster and St. Falls management need to evaluate? (50 marks) b. 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 The Gilster Company, a machine tooling firm, has several plants. One plant, located in St. Falls, Minnesota, uses a joh 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 $200,000. During the past year, actual plantwide overhead was $190,000. 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: 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: Instructions (Round overhead rates and unit costs to 2 decimal places and round other cost calculations to the nearest dollar.) Based on your previous findings in Formative Assessment 1&2 answer the following: a. If the subcontractor mentioned in part e (Formative Assessment 2) is located in Mexico, what additional international environmental issues, other than price, will Gilster and St. Falls management need to evaluate? (50 marks) b. 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? (50 marks)
