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 2017Actual Results for 2017Direct material costs2,250,0002,150,000Direct manufacturing labor costs1,700,0001,650,000Manufacturing overhead costs3,060,0003,217,500Compute 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 55,000Direct manufacturing labor costs 45,000Compute 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 manufacturing overhead under actual costing?Why might managers at Dakota Products prefer to use normal costing?

Compute the actual and budgeted manufacturing overhead rates for 2017: Therefore, the actual…

Answered: Actual costing, normal costing,…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter6: Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products

Section: Chapter Questions

Problem 3E: The following data appeared in the accounting records of Craig Manufacturing Inc., which uses the...

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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

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 55,000

Direct manufacturing labor costs 45,000

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 manufacturing overhead under actual costing?
Why might managers at Dakota Products prefer to use normal costing?

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