Question

manufacturing overhead costs $3,660,000 Actual machine-hours 196,000 1. Calculate the budgeted manufacturing overhead rate. 2 Calculate the manufacturing overhead allocated during 2017 3. Calculate the amount of under-or overallocated manufacturing overhead. Why do Taylor's managers need to calculate this amount? 4-25 Job costing, accounting for manufacturing overhead, budgeted rates. The Matthew Company uses Seormal 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: Machining Department Assembly Department Manufacturing overhead $1,500,000 $5,100,000 Direct manufacturing labor costs $1,600,000 $3,000,000 Direct manufacturing labor-hours 120,000 280,000 Machine-hours 30,000 270,000 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: Machining Department Assembly Department Direct materials used $42,000 $78,000 Direct manufacturing labor costs $15,000 $19,000 Direct manufacturing labor-hours 1,100 1,300 Machine-hours 2,800 1,100 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 condensed budget for 2017: Revenues $50,000,000 Total costs: Direct costs Professional Labor $ 20,000,000 Indirect costs Client support 25,000,000 45,000,000 Operating income $5,000,000 Frontier has a single direct-cost category (professional labor) and a single indirect-cost pool (client sup- nort). Indirect costs are allocated to jobs on the basis of professional labor costs.

Answer 1

1) Overhead rate :

Machining Department = 1500000/30000 = 50 per MH

Assembly Department = 5100000/3000000 = 170% of labor cost

2) Allocated overhead

Machining Department = 2800*50 = 140000

Assembly Department = 19000*1.7 = 32300

3) Calculate over or under applied overhead

	Applied overhead	Actual overhead	Under/Over applied overhead
Machining	33000*50 = 1650000	1800000	150000 Under applied
Assembly	3200000*1.7 = 5440000	5300000	140000 Over applied