Chapter 04 Booklet Part 2 Problems 2024

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University Of Arizona *

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584

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Accounting

Date

Apr 3, 2024

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pdf

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Uploaded by tnm126

This handout is to facilitate class and in-class activities. It may change. If so, then the change will be communicated to you. You need to read the textbook chapters, and you need to review your notes. If you miss class, please get the notes and handouts from a classmate. Do not distribute without permission of the instructor. If you have questions, please talk to me. Thanks. 1 CHAPTER 4 Job Costing 4-22 Actual costing, normal costing, accounting for manufacturing overhead. Dakota Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Dakota allocates manufacturing overhead costs using direct manufacturing labor costs . Dakota provides the following information: Required: 1. Compute the actual and budgeted manufacturing overhead rates for 2017. 2. During March, the job-cost record for Job 626 contained the following information: Compute the cost of Job 626 using (a) actual costing and (b) normal costing. JOB 626 Actual System Normal System DM $ 55,000.00 $ 55,000.00 DL $ 45,000.00 $ 45,000.00 Overhead Total 3. At the end of 2017, compute the under- or overallocated manufacturing overhead under normal costing. Why is there no under- or overallocated manufacturing overhead under actual costing? 4. Why might managers at Dakota Products prefer to use normal costing? unique dm dl DLC DM DL OH labor hours "normal" budget 3060000/1700000 =1.8 Actual rate : OH 3217500/DLC 1650000 = 1.95 DLC = = DLC *1.95 = 87750 *1.8 = 81000 DLC 187750 181000 "underapplied" timely!!! cost annual manu.OH applied/DLC 1650000 *actual rate > manu oh control/3217500 (given) *1.8 = 2970000 = 247500 underapplied "underallocated" J.E dr OH applied 2970000 dr COGS 247500 cr OH control 3217500 COGS method

This handout is to facilitate class and in-class activities. It may change. If so, then the change will be communicated to you. You need to read the textbook chapters, and you need to review your notes. If you miss class, please get the notes and handouts from a classmate. Do not distribute without permission of the instructor. If you have questions, please talk to me. Thanks. 2 Similar to 4-24 Accounting for manufacturing overhead. Creative Woodworking uses normal costing and allocates manufacturing overhead to jobs based on a budgeted labor-hour rate and actual direct labor-hours. Under or overallocated overhead, if immaterial, is written off to Cost of Goods Sold. During 2017, Creative recorded the following: Required: 1. Compute the budgeted manufacturing overhead rate. Part A: Formula and amounts. Part B: For the year, what is the Overhead Applied by Creative Woodworking? 2. Prepare the summary journal entry to record the allocation of manufacturing overhead. 3. Compute the amount of under or overallocated manufacturing overhead. Is the amount significant enough to warrant proration of overhead costs, or should Creative Woodworking write it off to cost of goods sold? Prepare the journal entry to dispose of the under- or overallocated overhead. Bud Oh/DLH = 4140000/180000 = 23 actual DLH * rate = 189000*23 = 4347000 OH applied WIP = DM DL OH dr WIP 4347000 cr OH applied 4347000 dr OH applied 4347000 cr OH control 4337000 (Actual) cr COGS 10000

This handout is to facilitate class and in-class activities. It may change. If so, then the change will be communicated to you. You need to read the textbook chapters, and you need to review your notes. If you miss class, please get the notes and handouts from a classmate. Do not distribute without permission of the instructor. If you have questions, please talk to me. Thanks. 3 Similar to 4-25 Job costing, accounting for manufacturing overhead, budgeted rates. The Solomon Company uses a job-costing system at its Dover, Delaware, plant. The plant has a machining department and a finishing department. Solomon uses normal costing with two direct-cost categories (direct materials and direct manufacturing 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 2017 budget for the plant is as follows: Required: 1. What is the budgeted manufacturing overhead rate in the machining department? In the finishing department? 2. During the month of January, the job-cost record for Job 431 shows the following: Compute the total manufacturing overhead cost allocated to Job 431. Why might Solomon use two different manufacturing overhead cost pools in its job-costing system? Machining OH: 10660000/205000 MH = 52 8000000/4000000 DLC = 2 DLC 1300 act *2 budg. rate = 2600 MH 150 actual * 52 budg = 7800 + = 10400 Job DM 19150 DM 1650 Cost OH 10400 applied =31200

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