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.)

Based on your previous findings in question e answer the following;

e) A St. Falls subcontractor has offered to produce the parts for job no. 110 for a price of $8 per unit. Assume the St. Falls sales force has already committed to the bid price based on the calculations in part b. Should St. Falls buy the $8 per unit part from the subcontractor or continue to make the parts for job no. 110 itself?

f) If the subcontractor mentioned in part e is located in Mexico, what additional international environmental issues, other than price, will Gilster and St. Falls management need to evaluate?

g) 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?