Comprehensive Problem: The Tool Company The Tool Company, a machine tooling firm, has several plants. One plant, located in Cleveland, Ohio, uses a job order costing system for its batch production processes. The Cleveland plant has $2$ 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 $\backslash (\backslash$$ $299,000\backslash ).$ During the past year, actual plant$-$wide overhead was $\backslash$$$267,000.$ Each department's overhead consists primarily of depreciation and other machine$-$related expenses. Selected budgeted and actual data from the Cleveland plant for the past year are as follows:Budgeted Department Overhead $($excludes plant$-$wide overhead$)$ For the coming year, the accountants at the Cleveland plant are in the process of helping the sales force create bids for several jobs. Projected data pertaining only to job $\backslash$#$110$ are as follows: Instructions $($Show your calculations for all$)$: Assume the Cleveland plant uses a single plant$-$wide overhead rate to assign all overhead $($plant$-$wide and department$)$ costs to jobs. Use expected total direct labor hours to compute the overhead rate. What is the plant$-$wide overhead rate? What is the expected total cost of job #$110?$ What is the expected cost per unit produced for job #$110?$ Recalculate the projected manufacturing costs for job #$110$ using three separate rates: one rate for plant$-$wide overhead and two separate department overhead rates, all based on machine$-$hours. Clearly state the overhead rate for each. What is the expected total cost of job #$110$ now? What is the expected cost per unit produced for job #$110?($NOTE $$ You should have $3$ overhead rates, but $1$ total job cost and $1$ total cost per unit$)$ The sales policy at the Cleveland plant dictates that job bids are to be calculated by adding $35\%$ to total manufacturing costs. What would be the bid for job #$110$ using $($A$)$ the overhead rate from #$1$ and $($B$)$ the overhead rate from #$2?$ Explain why the bids differ. Which of the overhead allocation methods would you recommend and why? Compute the over or under applied overhead for the Cleveland plant for the year using each method $($from #$1$ and then from #$2).$ Which method is more accurate? Why do you think that is$?$ Show the journal entry to close the overhead account to Cost of Goods Sold. $($NOTE $$ You should have $1$ journal entry for #$1$ and one journal entry for #$2)$ How will it affect Net Income in each case? A Cleveland contractor has offered to produce the parts for job #$110$ for a price of $$12$ per unit. Assume the Cleveland sales force has already committed to the bid price based on the calculations from #$2.$ Should the Cleveland plants buy the $$12$ per unit part from the subcontractor or continue to make the parts for job #$110$ itself? Would your response to #$5$ change if the Cleveland plant could use the facilities necessary to produce parts for job #$110$ for another job that could earn an incremental profit of $$40,000?$