Dustin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Dustin allocates manufacturing overhead costs using direct manufacturing labor costs. Dustin provides the following information: Read the requirements2. Requirement 1. Compute the actual and budgeted manufacturing overhead rates for 2017.(Enter your answer as a number [not as a percentage] rounded to two decimal places, X.XX.) Actual manufacturing overhead rate = Budgeted manufacturing overhead rate = Requirement 2. During March, the job-cost record for Job 626 contained the following information: Direct materials used $60,000 Direct manufacturing labor costs $30,000 Compute the cost of Job 626 using (a) actual costing and (b) normal costing. Actual Costing Direct materials Direct manufacturing labor costs Manufacturing overhead costs Total manufacturing costs of Job 626 Normal Costing Requirement 3. At the end of 2017, compute the under-or overallocated manufacturing overhead under normal costing. Why is there no under-or overallocated overhead under actual costing? Under normal costing, manufacturing overhead is (1) by $ . Why is there no under-or overallocated overhead under actual costing? There is no under-or overallocated overhead under actual costing because the overhead is allocated under actual costing by multiplying (2) manufacturing labor costs and the (3) manufacturing overhead rate. Requirement 4. Why might managers at Dustin Do products prefer to use normal costing? (Choose all that apply.) A. Manufacturing costs of a job are available much earlier in a normal costing system. Consequently, Dustin's manufacturing and sales managers can evaluate the profitability of different jobs, the efficiency with which the jobs are done, and the pricing of different jobs as soon as they are completed, while the experience is still fresh in everyone's mind. B. Normal costing enables Dustin Products to use the budgeted manufacturing overhead rate determined at the beginning of the year to estimate the cost of a job as soon as the job is completed. Managers want to know job costs for ongoing uses, including pricing jobs, monitoring, and managing costs, evaluating the success of the job, learning about what did and did not work, bidding on new jobs, and preparing interim financial statements. C. Normal costing allows managers to allocate overhead costs at the end of the accounting year. This allows Dustin Products to use the normal costs incurred to provide an accurate costing method so that adjustments will not need to be made at the end of the accounting year. D. Normal costing provides managers with information earlier-while there is still time to take corrective actions, such as improving the company's labor efficiency or reducing the company's overhead costs. E. Normal costing provides managers with information at the end of a fiscal year when they know actual manufacturing overhead costs. This approach is preferable to managers to improve the company's spending efficiency and increase overall profits. 1: Data Table Budget for 2017 Actual Results for 2017 Direct material costs $2,200,000 $2,125,000 Direct manufacturing labor costs 1,550,000 1,470,000 Manufacturing overhead costs 2,635,000 2,572,500 2: Requirements 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 $60,000 Direct manufacturing labor costs $30,000 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. Why is there no under-or overallocated overhead under actual costing? 4. Why might managers at Dustin Do products prefer to use normal costing?

Dustin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Dustin allocates manufacturing overhead costs using direct manufacturing labor costs. Dustin provides the following information: Read the requirements2. Requirement 1. Compute the actual and budgeted manufacturing overhead rates for 2017.(Enter your answer as a number [not as a percentage] rounded to two decimal places, X.XX.) Actual manufacturing overhead rate = Budgeted manufacturing overhead rate = Requirement 2. During March, the job-cost record for Job 626 contained the following information: Direct materials used $60,000 Direct manufacturing labor costs $30,000 Compute the cost of Job 626 using (a) actual costing and (b) normal costing. Actual Costing Direct materials Direct manufacturing labor costs Manufacturing overhead costs Total manufacturing costs of Job 626 Normal Costing Requirement 3. At the end of 2017, compute the under-or overallocated manufacturing overhead under normal costing. Why is there no under-or overallocated overhead under actual costing? Under normal costing, manufacturing overhead is (1) by $ . Why is there no under-or overallocated overhead under actual costing? There is no under-or overallocated overhead under actual costing because the overhead is allocated under actual costing by multiplying (2) manufacturing labor costs and the (3) manufacturing overhead rate. Requirement 4. Why might managers at Dustin Do products prefer to use normal costing? (Choose all that apply.) A. Manufacturing costs of a job are available much earlier in a normal costing system. Consequently, Dustin's manufacturing and sales managers can evaluate the profitability of different jobs, the efficiency with which the jobs are done, and the pricing of different jobs as soon as they are completed, while the experience is still fresh in everyone's mind. B. Normal costing enables Dustin Products to use the budgeted manufacturing overhead rate determined at the beginning of the year to estimate the cost of a job as soon as the job is completed. Managers want to know job costs for ongoing uses, including pricing jobs, monitoring, and managing costs, evaluating the success of the job, learning about what did and did not work, bidding on new jobs, and preparing interim financial statements. C. Normal costing allows managers to allocate overhead costs at the end of the accounting year. This allows Dustin Products to use the normal costs incurred to provide an accurate costing method so that adjustments will not need to be made at the end of the accounting year. D. Normal costing provides managers with information earlier-while there is still time to take corrective actions, such as improving the company's labor efficiency or reducing the company's overhead costs. E. Normal costing provides managers with information at the end of a fiscal year when they know actual manufacturing overhead costs. This approach is preferable to managers to improve the company's spending efficiency and increase overall profits. 1: Data Table Budget for 2017 Actual Results for 2017 Direct material costs $2,200,000 $2,125,000 Direct manufacturing labor costs 1,550,000 1,470,000 Manufacturing overhead costs 2,635,000 2,572,500 2: Requirements 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 $60,000 Direct manufacturing labor costs $30,000 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. Why is there no under-or overallocated overhead under actual costing? 4. Why might managers at Dustin Do products prefer to use normal costing?

Name: Dustin Products uses a job-costing system with two direct-cost categ
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Description: Dustin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Dustin allocates manufacturing overhead costs using direct manufacturing labor c

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Read the

requirements2.

Requirement 1. Compute the actual and budgeted manufacturing overhead rates for 2017.(Enter your answer as a number [not
as a percentage] rounded to two decimal places, X.XX.)

Actual manufacturing overhead rate	=
Budgeted manufacturing overhead rate	=

Requirement 2. During March, the job-cost record for Job 626 contained the following information:

	Direct materials used	$60,000
	Direct manufacturing labor costs	$30,000

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

	Actual
	Costing
Direct materials
Direct manufacturing labor costs
Manufacturing overhead costs
Total manufacturing costs of Job 626

Normal

Costing

Requirement 3. At the end of

2017,

compute the under-or overallocated manufacturing overhead under normal costing. Why is there no under-or overallocated overhead under actual costing?

Under normal costing, manufacturing overhead is

(1)

by $

Why is there no under-or overallocated overhead under actual costing?

There is no under-or overallocated overhead under actual costing because the overhead is allocated under actual costing by multiplying

(2)

manufacturing labor costs and the

(3)

manufacturing overhead rate.

Requirement 4. Why might managers at

Dustin

Do products prefer to use normal costing? (Choose all that apply.)

Manufacturing costs of a job are available much earlier in a normal costing system. Consequently,

Dustin's

manufacturing and sales managers can evaluate the profitability of different jobs, the efficiency with which the jobs are done, and the pricing of different jobs as soon as they are completed, while the experience is still fresh in everyone's mind.

Normal costing enables

Dustin

Products to use the budgeted manufacturing overhead rate determined at the beginning of the year to estimate the cost of a job as soon as the job is completed. Managers want to know job costs for ongoing uses, including pricing jobs, monitoring, and managing costs, evaluating the success of the job, learning about what did and did not work, bidding on new jobs, and preparing interim financial statements.

Normal costing allows managers to allocate overhead costs at the end of the accounting year. This allows

Dustin

Products to use the normal costs incurred to provide an accurate costing method so that adjustments will not need to be made at the end of the accounting year.

Normal costing provides managers with information earlier-while there is still time to take corrective actions, such as improving the company's labor efficiency or reducing the company's overhead costs.

Normal costing provides managers with information at the end of a fiscal year when they know actual manufacturing overhead costs. This approach is preferable to managers to improve the company's spending efficiency and increase overall profits.

1: Data Table

	Budget for 2017	Actual Results for 2017
Direct material costs	$2,200,000	$2,125,000
Direct manufacturing labor costs	1,550,000	1,470,000
Manufacturing overhead costs	2,635,000	2,572,500

2: Requirements

Compute the actual and budgeted manufacturing overhead rates for

2017.

During March, the job-cost record for Job 626 contained the following information:

	Direct materials used	$60,000
	Direct manufacturing labor costs	$30,000

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

At the end of

2017,

compute the under-or overallocated manufacturing overhead under normal costing. Why is there no under-or overallocated overhead under actual costing?

Why might managers at

Dustin

Do products prefer to use normal costing?

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