Question

4-25 Job cesting, accounting for manufacturing overhead, budgeted rates. The Matthew Company uses a normal job-costing system at its Minneapolis plant. The plant has a machining department and an assem- bly department. Its job-costing system has two direct-cost categories (direct materials and direct manufac- turing labor) and two manufacturing overhead cost pools (the machining department overhead, allocated to jobs based on actual machine-hours, and the assembly department overhead, allocated to jobs based on actual direct manufacturing labor costs). The 2017 budget for the plant is as follows: Manufacturing overhead Direct manufacturing labor costs Direct manufacturing labor-hours Machine hours Machining Department $1,500,000 $1,600,000 120,000 30,000 Assembly Department $5,100,000 $3,000,000 280,000 270,000 Required 1. Present an overview diagram of Matthew's job-costing system. Compute the budgeted manufacturing overhead rate for each department. 2. During February, the job-cost record for Job 494 contained the following: Direct materials used Direct manufacturing labor costs Direct manufacturing labor-hours Machine-hours Machining Department $42,000 $15,000 1.100 Assembly Department $78,000 $19,000 1.300 1,100 2.800 Compute the total manufacturing overhead costs allocated to Job 494 3. At the end of 2017, the actual manufacturing overhead costs were $1,800,000 in machining and $5,300,000 in assembly. Assume that 33,000 actual machine-hours were used in machining and that actual direct manufacturing labor costs in assembly were $3,200,000. Compute the over or underal located manufacturing overhead for each department 4-26 Job costing, consulting firm. Frontier Partners, a management consulting firm has the following

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Solution for 4-25)

Sheet21 Sheet22 Sheet23 Sheet24 Requirement #1) Indirect ansted} Machine department manufacturing overhead Assembly department manufacturing overhead Cast allegatina base Direct menufacturing labor Machine hours ant Indirect Cost Cast Object product Direct Cost Direct Cost Direct Material Direct facturing Labor Budgeted manufacturing OH rate for machine dept: =Budgeted manufacturing OH/Budgeted machine hrs =1500000/30000 $50 per machine hr Budgeted manufacturing OH rate for assemble dept: =Budgeted manufacturing OH/Direct manufacturing labor cost =5100000/3000000 = 170% of labor cost 35 8 l B A ♡ E Merge 5 Wra

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37 38 Requirement #2) 39 Manufacturing OH costs allocated to Job 494 40 41 42 Particulars Maching department (S50*2,800) Assemblydepartment (170%*$19,000) Total manufacutring overhead allocated to Job 494 Amount (3) 140,000 32.300 172.300 43 44 45 46 47 Requirement #3 48 49 Under allocated or over allocated manufacturing OH for each department 50 51 52 Machining | Assembly department department () L (S) $1,800,000 $5,300,000 53 54 55 Particulars Actual manufacturing overhead Manufacturing overhead allocated S50*33,000 S170%*3,200.000 Underallocated (Overallocated) $1,650.000 56 $5,440,000 ($140.000) 57 $150.000 58 59

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