Question

The Toy Compay uses a job-costing system at its Chicago plant. The plant has a machining department and a finishing department. Toy uses normal costing with two direct-cost categories (direct materials and direct manufacturijng labor) and two manufacturing overhead cost pools (the machining department with direct material costs as the alloation base and finishing department with direct costs as the allocation base.) The 2020 budget for the plant is as follows:
		Machining department		Finisghing department
Manufacturing overhead cost		$ 9,000,000		$ 4,000,000
Direct material		$ 140,000		$ 4,000,000
Direct manufacturing labor cost		$ 970,000		$ 4,000,000
Direct manufacturing labor-hour		26,000		160,000
Machin hours		205,000		31,000
What is the budgeted manufacturing overhead rate in the respective departments?
During the month of February, the job-cost record for Job 500 shows the following:
		Machining department		Finisghing department
Direct materials used		$ 21,150		$ 5,000
Direct labor used		$ 350		$ 1,300
Direct labor hours		30		50
Machine hours		150		20
Units produced	500
Prepare the respective journal entries to match cost flows to product flows
Direct material:		Debit		Credit
Machining department
Finishing department
Direct labor:
Machining department
Finishing department
Manufacturing overhead:
Machining department
Finishing department

What is the total product cost for this job? Cost per unit?

Answer 1

What is the budgeted manufacturing overhead rate in the respective departments?
Machining Department overhead = $9,000,000/$140,000	6429%	of Direct Material cost
Finishing Department overhead = $4,000,000 /(4,000,000 + $4,000,000)	50%	of Direct  cost
During the month of February, the job-cost record for Job 500 shows the following:
	Machining department	Finisghing department
Direct materials used	$21,150	$5,000
Direct labor used	$350	$1,300
Direct labor hours	30	50
Machine hours	150	20
Units produced	500
Prepare the respective journal entries to match cost flows to product flows
Direct material:	Debit	Credit
Machining department
Work-in-Process Control	$21,150
Material Control		$21,150
Finishing department
Work-in-Process Control	$5,000
Material Control		$5,000
Direct labor:
Machining department
Work-in-Process Control	$350
Wages Payable Control		$350
Finishing department
Work-in-Process Control	$1,300
Wages Payable Control		$1,300
Manufacturing overhead:
Machining department
Work-in-Process Control (6429% x $21150)	$1,359,642.86
Manufacturing Overhead Allocated		$1,359,642.86
Finishing department
Work-in-Process Control (50% x (5000+1300)	$3,150
Manufacturing Overhead Allocated		$3,150
What is the total product cost for this job? Cost per unit?
Direct costs:
Direct materials––Machining Department	$21,150
––Finishing Department	$5,000
Direct manufacturing labor - Maching Department	$350
––Finishing Department	$1,300
Indirect costs:
Machining Department overhead,	$1,359,642.86
Finishing Department overhead,	$3,150
Total product cost for this job	$1,390,593
Units Produced	500	units
Cost per unit	$2,781.19