Chapter 4, Problem 4.25E

Job costing, accounting for manufacturing overhead, budgeted rates. The Matthew 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 2017 budget for the plant is as follows:

	Machining Department	Assembly Department
Manufacturing overhead	$1,500,000	$5,100,000
Direct manufacturing labor costs	$1,600,000	$3,000,000
Direct manufacturing labor-hours	120,000	280,000
Machine-hours	30,000	270,000

1. 1. Present an overview diagram of Matthew’s job-costing system. Compute the budgeted manufacturing overhead rate for each department.

  Required

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

	Machining Department	Assembly Department
Direct materials used	$42,000	$78,000
Direct manufacturing labor costs	$15,000	$19,000
Direct manufacturing labor-hours	1,100	1,300
Machine-hours	2,800	1,100

  Compute the total manufacturing overhead costs allocated to Job 494.

1. 3. At the end of 2017, the actual manufacturing overhead costs were $1,800,000 in machining and $5,300,000 in assembly. Assume that 33,000 actual machine-hours were used in machining and that actual direct manufacturing labor costs in assembly were $3,200,000. Compute the over- or underallocated manufacturing overhead for each department.