The Lynn Company uses a normal job-costing system at its Minneapolis plant. The plant has a machining department and an assembly department. Its job-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and two manufacturing overhead cost pools (the machining department overhead, allocated to jobs based on actual machine-hours, and the assembly department overhead, allocated to jobs based on actual direct manufacturing labor costs). The 2021 budget for the plant is as follows: Machining Department Assembly Department Manufacturing Overhead 1,800,000 3,600,000 Direct Manufacturing labor costs 1,400,000 2,000,000 Direct manufacturing labor hours 100,000 200,000 Machine Hours 50,000 200,000 Compute the budgeted manufacturing overhead rate for each department. 2-During February, the job-cost record for Job 494 contained the following: Machining Department Assembly Department Direct Materials Used 45,000 70,000 Direct Manufacturing labor costs 14,000 15,000 Direct manufacturing labor hours 1,000 1,500 Machine Hours 2,000 1,000 Compute the total costs allocated to Job 494 and the price of the job assuming a 10% markup. At the end of 2021, the actual manufacturing overhead costs were $2,100,000 in machining and $3,700,000in assembly. Assume that 55,000 actual machine-hours were used in machining and that actual direct manufacturing labor costs in assembly were $2,200,000. Compute the over- or under-allocated manufacturing overhead for each department.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...

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The Lynn Company uses a normal job-costing system at its Minneapolis plant. The plant has a machining department and an assembly department. Its job-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and two manufacturing overhead cost pools (the machining department overhead, allocated to jobs based on actual machine-hours, and the assembly department overhead, allocated to jobs based on actual direct manufacturing labor costs). The 2021 budget for the plant is as follows:

	Machining Department	Assembly Department
Manufacturing Overhead	1,800,000	3,600,000
Direct Manufacturing labor costs	1,400,000	2,000,000
Direct manufacturing labor hours	100,000	200,000
Machine Hours	50,000	200,000

Compute the budgeted manufacturing overhead rate for each department.

2-During February, the job-cost record for Job 494 contained the following:

	Machining Department	Assembly Department
Direct Materials Used	45,000	70,000
Direct Manufacturing labor costs	14,000	15,000
Direct manufacturing labor hours	1,000	1,500
Machine Hours	2,000	1,000

Compute the total costs allocated to Job 494 and the price of the job assuming a 10% markup.

At the end of 2021, the actual manufacturing overhead costs were $2,100,000 in machining and $3,700,000in assembly. Assume that 55,000 actual machine-hours were used in machining and that actual direct manufacturing labor costs in assembly were $2,200,000. Compute the over- or under-allocated manufacturing overhead for each department.

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