Cost Accounting

CHAPTER 4 JOB COSTING 4-17 (20 min.) Actual costing, normal costing, accounting for manufacturing overhead. Budgeted manufacturing overhead costs Budgeted direct manufacturing labor costs $2, 700, 000 = 1.80 or 185% $1, 500, 000 Actual manufacturing overhead costs Actual direct manufacturing labor costs

1.

Budgeted manufacturing overhead rate

=

=

Actual manufacturing overhead rate

=

2.

$2, 755, 000 = 1.9 or 190% $1, 450, 000 Costs of Job 626 under actual and normal costing follow: = Actual Costing Normal Costing $ 40,000 30,000 54,000 $124,000

Direct materials Direct manufacturing labor costs Manufacturing overhead costs $30,000 × 1.90; $30,000 × 1.80 Total manufacturing costs of Job 626

$ 40,000 30,000 57,000 $127,000

4-1

3.

Total manufacturing overhead = allocated under normal costing

Actual manufacturing × Budgeted labor costs overhead rate

= $1,450,000 × 1.80 = $2,610,000

Underallocated manufacturing = overhead

Actual manufacturing – Manufacturing overhead costs overhead allocated

= $2,755,000 − $2,610,000 = $145,000 There is no under- or overallocated overhead under actual costing because overhead is allocated under actual costing by multiplying actual manufacturing labor costs and the actual manufacturing overhead rate. This, of course equals the actual manufacturing overhead costs. All actual overhead costs are allocated to products. Hence, there is no under- or overallocatead overhead.

4-2

4-18 1.

(20 -30 min.) Job costing, normal and actual costing.

Budgeted indirectcost rate

=

Budgeted indirect costs $8,000,000 = Budgeted direct labor-hours 160,000 hours

= $50 per direct labor-hour

Actual indirectcost rate

=

$6,888,000 Actual indirect costs = Actual direct labor-hours 164,000 hours

= $42 per direct labor-hour These rates differ because both the numerator and the denominator in the two calculations are different—one based on budgeted numbers and the other based on...