Business
Business, 08.02.2021 05:20, bethdove9466

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 $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. Cloud plant for the past year are as follows. Department A Department B
Budgeted department overhead
(excludes plantwide overhead) $ 85,000 $ 368,000
Actual department overhead 100,000 375,000
Expected total activity:
Direct labor hours 42,000 10,000
Machine-hours 17,000 46,000
Actual activity:
Direct labor hours 42,500 8,200
Machine-hours 17,500 48,000
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 $ 18,000
Direct labor cost:
Department A (2,200 hr) 33,000
Department B (1,200 hr) 6,000
Machine-hours projected:
Department A 100
Department B 1,200
Units produced 13,000
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?

answer
Answers: 2

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The Gilster Company, a machine tooling firm, has several plants. One plant, located in St. Cloud, Mi...

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