Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Davey allocates manufacturing overhead costs using direct manufacturing labor costs.Davey provides the following information: Budget for 2017 Actual Results for 2017 Direct material costs 2,050,000 1,975,000 Direct manufacturing labor costs 1,600,000 1,550,000 Manufacturing overhead costs 2,880,000 2,945,000 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 $50,000 Direct manufacturing labor costs $40,000 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
Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Davey allocates manufacturing overhead costs using direct manufacturing labor costs.Davey provides the following information: Budget for 2017 Actual Results for 2017 Direct material costs 2,050,000 1,975,000 Direct manufacturing labor costs 1,600,000 1,550,000 Manufacturing overhead costs 2,880,000 2,945,000 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 $50,000 Direct manufacturing labor costs $40,000 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing
Davey allocates manufacturing overhead costs using direct manufacturing labor costs .Davey provides the following information:
Budget for 2017
|
Actual Results for 2017
|
|
Direct material costs
|
2,050,000 |
1,975,000
|
|
||
Direct manufacturing labor costs
|
1,600,000
|
1,550,000
|
Manufacturing overhead costs
|
2,880,000
|
2,945,000 |
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.
|
||||||
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
Davey
Products prefer to use normal costing? |
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