Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 $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: 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? - b's cost is $7.33 per unit and the contractors price is 8 per unit, therefore the contractor is more costly so it would make more sense that St. Falls makes its own parts for job no. 110 in their own facilities themselves - St. Falls price per product is cheaper and they would be saving $0.67, therefore this is the choice that should be made. 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)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started