Question:
Job costing, accounting for manufacturing overhead, budgeted rates.
Giannacopoulos SA uses a job-costing system at its Korinthos plant. The plant has a Machining Department and an Assembly Department. Its job-costing system has two direct-cost categories (direct materials and direct manufacturing labour) and two manufacturing overhead cost pools (the Machining Department, allocated using actual machine-hours, and the Assembly Department, allocated using actual labour cost). The 2007 budget for the plant is as follows:
Machining Assembly
Department Department
|
Manufacturing overhead
|
€1 800 000
|
€3 600 000
|
|
Direct manufacturing labour cost
|
€1 400 000
|
€2 000 000
|
|
Direct manufacturing labour-hours
|
€100 000
|
€200 000
|
|
Machine-hours
|
50 000
|
200 000
|
Required
1 Present an overview diagram of Giannacopoulos's job-costing system. What is the bud- geted overhead rate that should be used in the Machining Department? In the Assembly Department?
2 During the month of February, the cost record for Job 494 shows the following:
Machining Assembly
Department Department
|
Direct material used
|
€45 000
|
€70 000
|
|
Direct manufacturing labour cost
|
€14 000
|
€15 000
|
|
Direct manufacturing labour-hours
|
1 000
|
1 500
|
|
Machine-hours
|
2 000
|
1 000
|
What is the total manufacturing overhead allocated to Job 494?
|
3 Balances at the end of 2007 are as follows:
|
Machining
|
Assembly
|
|
Department
|
Department
|
|
Manufacturing overhead incurred
|
€2 100 000
|
€3 700 000
|
|
Direct manufacturing labour cost
|
-
|
€2 200 000
|
|
Machine-hours
|
55 000
|
-
|
Calculate the under- or overallocated manufacturing overhead for each department.