4-22 Actual costing, normal costing, accounting for manufacturing overhead. Dakota 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 manu- facturing labor costs. Dakota provides the following information: uses a Budget for 2017 $2,250,000 Actual Results for 2017 $2,150,000 Direct material costs 1,650,000 Direct manufacturing labor costs Manufacturing overhead costs 1,700,000 3,060,000 3,217,500 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: Direct materials used Direct manufacturing labor costs $55,000 $45,000 Compute the cost of Job 626 using (a) actual costing and (b) normal costing. 3. At the end of 2017, compute the under- or overallocated manufacturing overhead under normal costin Why is there no under- or overallocated manufacturing overhead under actual costing?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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**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:

|                     | Budget for 2017 | Actual Results for 2017 |
|---------------------|-----------------|-------------------------|
| Direct material costs | $2,250,000     | $2,150,000             |
| Direct manufacturing labor costs | $1,700,000  | $1,650,000            |
| Manufacturing overhead costs | $3,060,000  | $3,217,500            |

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:**
   - Direct materials used: $55,000
   - Direct manufacturing labor costs: $45,000

   Compute the cost of Job 626 using (a) actual costing and (b) normal costing.

3. **At the end of 2017, compute the under- or overallocated manufacturing overhead under normal costing.**
4. **Why is there no under- or overallocated manufacturing overhead under actual costing?**
5. **Why might managers at Dakota Products prefer to use normal costing?**
Transcribed Image Text:**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: | | Budget for 2017 | Actual Results for 2017 | |---------------------|-----------------|-------------------------| | Direct material costs | $2,250,000 | $2,150,000 | | Direct manufacturing labor costs | $1,700,000 | $1,650,000 | | Manufacturing overhead costs | $3,060,000 | $3,217,500 | 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:** - Direct materials used: $55,000 - Direct manufacturing labor costs: $45,000 Compute the cost of Job 626 using (a) actual costing and (b) normal costing. 3. **At the end of 2017, compute the under- or overallocated manufacturing overhead under normal costing.** 4. **Why is there no under- or overallocated manufacturing overhead under actual costing?** 5. **Why might managers at Dakota Products prefer to use normal costing?**
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