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
$300,000. During the past year, actual plantwide overhead was $244,000. Each department’s
overhead consists primarily of depreciation and other machine-related expenses. Selected
budgeted and actual data from the St. Falls plant for the past year are as follows:
For the coming year, the accountants at St. Falls are in the process of helping the sales force
create bids for several jobs. Projected data pertaining to job no. 110 are as follows:
Section BreakComprehensive Problem 5
1.Comprehensive Problem 5 Part a
Assume the St. Falls plant uses a single plantwide overhead rate to assign all overhead
(plantwide and department) costs to jobs. Find the overhead rate by using expected direct labor
hours. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Determine the projected amount of total manufacturing costs per unit for the units in job no.
110.(Round your answer to 2 decimal places. Omit the "$" sign in your response.)
2.Comprehensive Problem 5 Part b
Calculate plantwide overhead rate using Machine Hours on projected manufacturing costs for job
no. 110. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Calculate two separate department overhead rates using Machine Hours on projected
manufacturing costs for job no. 110. (Round your answers to 1 decimal place.Omit the "$" sign
in your response.)
Recalculate the projected manufacturing costs for job no. 110 using three separate rates: one rate
for plantwide overhead and two separate department overhead rates, all based on machine-
hours.(Round your intermediate calculations and final answer to 2 decimal places. Omit the "$"
sign in your response.)
3.Comprehensive Problem 5 Part c

The sales policy at St. Falls dictates that job bids be calculated by adding 24 percent to total
manufacturing costs. What would be the bid for job no. 110 using the overhead rate from part a
?(Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar
amount. Omit the "$" sign in your response.)
The sales policy at St. Falls dictates that job bids be calculated by adding 24 percent to total
manufacturing costs. What would be the bid for job no. 110 using the overhead rate from part b
?(Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar
amount. Omit the "$" sign in your response.)
4.Comprehensive Problem 5 Part d
Using the allocation rates in part b, compute the under- or overapplied overhead for the St. Falls
plant for the year. (Round your intermediate calculations to 2 decimal places and final answer to
the nearest dollar amount. Omit the "$" sign in your response.)
5.
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?
Continue to make the part or use a Subcontractor
6.
Would your response to part e change if the St. Falls plant could use the facilities necessary to
produce parts for job no. 110 for another job that could earn an incremental profit of $25,000?
Yes
No
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
$300,000. During the past year, actual plantwide overhead was $244,000. 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:
Solution
1.Comprehensive Problem 5 Part a
Assume the St. Falls plant uses a single plantwide overhead rate to assign all overhead
(plantwide and department) costs to jobs. Find the overhead rate by using expected direct labor

hours. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Overhead rate = Budgeted Total Overhead/Budgeted Total Labor hour
Overhead rate = (300000+109200+567000)/(58000+15000)
Overhead rate = $ 13.37
Determine the projected amount of total manufacturing costs per unit for the units in job no.
110.(Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Total Manufacturing costs for Job 110 = Direct Material + Direct Labor + Manufacturing
Overhead applied
Total Manufacturing costs for Job 110 = 22000 + (39000+12400) + 13.37*(2600+800)
Total Manufacturing costs for Job 110 = $ 118,858
Manufacturing costs for Job 110 per unit = Total Manufacturing costs for Job 110 / Unit
Produced
Manufacturing costs for Job 110 per unit = 118858/13000
Manufacturing costs for Job 110 per unit = $ 9.14
2.Comprehensive Problem 5 Part b
Calculate plantwide overhead rate using Machine Hours on projected manufacturing costs for job
no. 110. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Plantwide overhead rate = Budgeted Plantwide Overhead Rate/ Expected No of Machine Hour
Plantwide overhead rate = 300000/(14000+54000)
Plantwide overhead rate = $ 4.41
Calculate two separate department overhead rates using Machine Hours on projected
manufacturing costs for job no. 110. (Round your answers to 1 decimal place.Omit the "$" sign
in your response.)
Overhead rate—Department A = Expected Department Overhead / Expected Machine hour of
Department
Overhead rate—Department A = 109200/14000
Overhead rate—Department A = $ 7.80
Overhead rate—Department B= Expected Department Overhead / Expected Machine hour of
Department
Overhead rate—Department B = 567000/54000
Overhead rate—Department B = $ 10.5
Recalculate the projected manufacturing costs for job no. 110 using three separate rates: one rate
for plantwide overhead and two separate department overhead rates, all based on machine-
hours.(Round your intermediate calculations and final answer to 2 decimal places. Omit the "$"

sign in your response.)
Total Manufacturing costs for Job 110 = Direct Material + Direct Labor + Manufacturing
Overhead applied
Total Manufacturing costs for Job 110 = 22000 + (39000+12400) + (4.41*(110+1200) +
7.80*110 + 10.50*1200)
Total Manufacturing costs for Job 110 = $ 92635.10
Manufacturing costs for Job 110 per unit = Total Manufacturing costs for Job 110 / Unit
Produced
Manufacturing costs for Job 110 per unit = 92635.1/13000
Manufacturing costs for Job 110 per unit = $ 7.13
3.Comprehensive Problem 5 Part c
The sales policy at St. Falls dictates that job bids be calculated by adding 24 percent to total
manufacturing costs. What would be the bid for job no. 110 using the overhead rate from part a
?(Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar
amount. Omit the "$" sign in your response.)
Bid price = 9.14 + 24%*9.14
Bid price = 11.33
The sales policy at St. Falls dictates that job bids be calculated by adding 24 percent to total
manufacturing costs. What would be the bid for job no. 110 using the overhead rate from part b
?(Round your intermediate calculations to 2 decimal places and final answer to the nearest dollar
amount. Omit the "$" sign in your response.)
Bid price = 7.13 + 24%*7.13
Bid price = 8.84
4.Comprehensive Problem 5 Part d
Using the allocation rates in part b, compute the under- or overapplied overhead for the St. Falls
plant for the year. (Round your intermediate calculations to 2 decimal places and final answer to
the nearest dollar amount. Omit the "$" sign in your response.)
Overhead applied = 4.41*(14700+56000) + 7.80*14700 + 10.50*56000
Overhead applied = $ 1014447
Actual Overhead = 244000 + 132000+585000
Actual Overhead = 961000
Overapplied Overhead = 1014447-961000
Overapplied Overhead = $ 53,447a.1
Assume the St. Falls plant uses a single plantwide overhead rate to assign all overhead
(plantwide and department) costs to jobs. Find the overhead rate by using expected direct labor
hours. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)