Question

4-31 Job costing, accounting for manufacturing overhead, budgeted rates. The Fasano Company uses a job-costing system at its Dover, Delaware, plant. The plant has a machining department and a finishing department. Fasano uses normal costing with two direct-cost categories (direct materials and direct manu. facturing labor) and two manufacturing overhead cost pools (the machining department with machine. hours as the allocation base, and the finishing department with direct manufacturing labor costs as the allocation base). The 2011 budget for the plant is as follows: Manufacturing overhead costs Direct manufacturing labor costs Direct manufacturing labor-hours Machine-hours Machining Department $10,660,000 $ 940,000 36,000 205,000 Finishing Department $7,372,000 $3,800,000 145,000 32,000 ASSIGNMENT MATERIAL Required 1. Prepare an overview diagram of Fasano's job-costing system. 2. What is the budgeted manufacturing overhead rate in the machining department? In the finishing department? 3. During the month of January, the job-cost record for Job 431 shows the following: Machining Department $15,500 $ 400 50 130 Finishing Department $5,000 $1,1,00 Direct materials used Direct manufacturing labor costs Direct manufacturing labor-hours Machine-hours Compute the total manufacturing overhead cost allocated to Job 431. 4. Assuming that Job 431 consisted of 400 units of product, what is the cost per unit? 5. Amounts at the end of 2011 are as follows: Manufacturing overhead incurred Direct manufacturing labor costs Machine-hours Machining Department $11,070,000 $ 1,000,000 210,000 Finishing Department $8,236,000 $4,400,000 31,000 Compute the under or overallocated manufacturing overhead for each department and for the Dover plant as a whole. 6. Why might Fasano use two different manufacturing overhead cost pools in its job-costing system? firmorializing in lahor rela

Answer 1

Solution 1 Allocation Base Per hour rate Total Amount $ $ 9,40,000 36000 hours 1,06,60,000 205000 hours 1,16,00,000 26.11 52.00 Particulars i) Machining Department Direct Labour Cost Manufacturing Overhead Costs Total of Machining Dept (A) ii) Finishing Department Direct Labour Cost Manufacturing Overhead cost Total of Finishing Dept (B) Total Cost (A+B) 2.62 50.84 $ $ $ 3,80,000 145000 hours 73,72,000 145000 hours 77,52,000 1,93,52,000 Direct Material will also be added in the above diagram, but was not mentioned in the question Solution 2 Statement showing Budgeted Manufacturing Overhead rate Particulars Amount i) Machining Dept Manufacturing Overhead (a) $ 1,06,60,000 (bases of Allocation - Machine hours) (b) 205000 hours Machine Dept Overhead Rate (a/b) $ 52.00 per hour $ i) Finishing Dept Manufacturing Overhead (bases of Allocation - Labour hours) Finishing Dept Overhead Rate (a) (b) (a/b) 73,72,000 145000 hours 50.84 per hour $

Amount Solution 3. Computation of Total Cost of Manufacturinig of Job-431 Particulars Amount i) Manufacturing Dept Direct Material 15500 Direct Labour cost Allocated Manufacturing overhead 6760 (130 machine hours x $52) 400 22660 i) Finishning Dept Direct Material Direct Labour cost Allocated Manufacturing overhead (50 Direct labour hours x $50.84) 5000 1100 2542 8642 Total Manufacturing Cost 31302 Solution 4. Total Cost of Job 431 (A) $ Number of Units manufactured (B) Cost per unit (A/B) $ 31,302.00 400 units 78.26

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