Concept explainers
Actual costing, normal costing, accounting for manufacturing
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.
Required
- 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. Why is there no under- or overallocated manufacturing overhead under actual costing?
- 4. Why might managers at Dakota Products prefer to use normal costing?
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