Problem:
Actual costing, normal costing, accounting for manufacturing overhead. Destin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Destin allocates manufacturing overhead costs using direct manufacturing labor costs. Destin provides the following information:
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Budget for 2011
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Actual Results for 2011
|
|
Direct material costs
|
$2,000,000
|
$1,900,000
|
|
Direct manufacturing labor costs
|
1,500,000
|
1,450,000
|
|
Manufacturing overhead costs
|
2,700,000
|
2,755,000
|
1. Compute the actual and budgeted manufacturing overhead rates for 2011.
2. During March, the job-cost record for Job 626 contained the following information:
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Direct materials used
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$40,000
|
|
Direct manufacturing labor costs
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$30,000
|
Compute the cost of Job 626 using (a) actual costing and (b) normal costing.
3. At the end of 2011, compute the under- or over allocated manufacturing overhead under normal costing. Why is there no under- or over allocated overhead under actual costing?