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 $288,000. 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 A Department B
Budgeted department overhead (excludes plantwide overhead) $159,600 $552,000
Actual department overhead $120,000 $572,000
Expected total activity:
Direct labor hours 36,000 20,000
Machine-hours 19,000 46,000
Actual activity:
Direct labor hours 38,000 18,500
Machine-hours 19,800 48,000
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: $24,500
Direct labor cost:
Department A (2,800 hr) - $42,000
Department B (1,500 hr) - $13,200
Machine-hours projected:
Department A - 160
Department B - 1,200
Units produced - 8,000
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.