Question

overhead rate from part a= 13.88

overhead rate from part b= 3.91

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 $250,000. During the past year, actual plantwide overhead was $240,000. 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. Department Department $ 162,000 170,000 $546,000 564,000 Budgeted department overhead (excludes plantwide overhead) Actual department overhead Expected total activity: Direct labor hours Machine-hours Actual activity: Direct labor hours Machine-hours 54,000 12,000 15.000 52.000 55,500 12,700 14,000 54,000 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 only to job no. 110 are as follows. Direct materials Direct labor cost: $21,000

answer all parts of of question c (c-1, c-2, c-3)

c-3 options are: by direct labor hours or by machine hours

Answer 1

Answer is given below

Plant wide rate based on Direct Labor hours Total Overheads $958,000 $13.88 Total Direct Labour hours 69,000 Plant wide rate on Machine hours Budgeted Overhead $250,000 Machine hours $3.91 64,000 Departmental OH rate Budgeted Overhead Machine hours Dept A Dept B $162,000 $546,000 | 12,000 52,000 Departmental OH rate $13.50 $10.50 C-1 $21,000 Direct Material Direct Labor Department A Department B Overheads (3,200 hours X $13.88) Total Cost Add: 22% Bid price $36,000 $10,800 $44,429 $112,229 $24,690 $136,919 C-2 $21,000 $36,000 $10,800 Direct Material Direct Labor Department A Department B Overheads Plant wide Department A Department B Total Cost Add: 22% Bid price $5,313 $2,160 $12,600 $87,873 $19,332 $107,204 C-3 Machine hours method is preferable since department wise Machine overhead rate is calculated and actual usage of machine hours is considered Labor hours used at overall level does not reflect actual usage of resources