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%u2019s salary, accounting personnel, cafeteria, and human resources, is budgeted at $300,000. During the past year, actual plantwide overhead was $284,000. Each department%u2019s 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) |
$ |
141,100 |
|
$ |
616,000 |
|
| Actual department overhead |
|
162,000 |
|
|
636,000 |
|
| Expected activity: |
|
|
|
|
|
|
| Direct labor hours |
|
32,000 |
|
|
20,000 |
|
| Machine-hours |
|
17,000 |
|
|
44,000 |
|
| Actual activity: |
|
|
|
|
|
|
| Direct labor hours |
|
33,500 |
|
|
19,400 |
|
| Machine-hours |
|
17,800 |
|
|
46,000 |
|
|
|
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 |
$ |
23,500 |
|
| Direct labor cost: |
|
|
|
| Department A (2,600 hr) |
|
39,000 |
|
| Department B (1,500 hr) |
|
11,600 |
|
| Machine-hours projected: |
|
|
|
| Department A |
|
140 |
|
| Department B |
|
1,200 |
|
| Units produced |
|
8,000 |
|
|