Required information

Comprehensive Problem $5($Algo$)$

Skip to question

$[$The following information applies to the questions displayed below.$]$

Jasper Company, a machine tooling firm, has several plants. One plant, located in Saint Cloud, Minnesota, uses a job order costing system for its batch production processes. The Saint Cloud 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 $$238,000.$ Each department$$s overhead consists primarily of depreciation and other machine$-$related expenses. Selected budgeted and actual data from the Saint Cloud plant for the past year are as follows:

Department A Department B

Budgeted department overhead $($excludes plantwide overhead$)$ $ $143,000$ $ $688,500$

Actual department overhead $162,000706,500$

Expected total activity:

Direct labor hours $52,00015,000$

Machine$-$hours $11,00051,000$

Actual activity:

Direct labor hours $52,50013,500$

Machine$-$hours $11,70053,000$

For the coming year, the accountants at the Saint Cloud plant are in the process of helping the salesforce create bids for several jobs. Projected data pertaining only to job number $110$ are as follows:

Direct materials $ $20,500$

Direct labor cost:

Department A $(2,400$ hours$)36,000$

Department B $(1,200$ hours$)10,000$

Machine$-$hours projected:

Department A $150$

Department B $1,200$

Units produced $10,000$

Comprehensive Problem $5($Algo$)$ Part f

f$.$ A Saint Cloud subcontractor has offered to produce the parts for job number $110$ for a price of $$10$ per unit. Assume the Saint Cloud sales force has already committed to the bid price of $$90,090\mathrm{.}50.$ Compute incremental cost $($benefit$)$ to make if the Saint Cloud plant could use the facilities necessary to produce parts for job number $110$ for another job that could earn an incremental profit of $$23,000?$ Assume the Saint Cloud plant uses three separate overhead rates to assign overhead costs to jobs based on machine hours.