ACCT20076, Term 3, 2015 Assignment 2
Manufacturing overhead, Job costing and budgeted rates - 40 Marks (The marks will be weighted down to 20 marks)
The Holden Company uses a job-costing system at its Sydney, Ashfield plant. The plant has a machining department and a finishing department. Holden uses normal costing with two direct-cost categories (direct materials and direct manufacturing labor) and two manufacturing overhead cost pools (the machining department with machine hours as the allocation base, and the finishing department with direct manufacturing labor costs as the allocation base). The 2013 budget for the plant is as follows:
Machining Department Finishing Department
Manufacturing overhead costs $9,750,000 $6,296,000
Direct manufacturing labor costs $920,000 $3,330,000
Direct manufacturing labor-hours 42000 145000
Machine-hours 215000 53000
Required:
1. Prepare an overview diagram of Holden’s job-costing system. (8 Marks)Required
2. What is the budgeted manufacturing overhead rate in the machining department? In the finishing department? (4 Marks)
3. During the month of January, the job-cost record for Job 369 shows the following:
Machining Department Finishing Department
Manufacturing overhead costs 17,300 5,200
Direct manufacturing labor costs 380 1,600
Direct manufacturing labor-hours 60 60
Machine-hours 142 40
Compute the total manufacturing overhead cost allocated to Job 369. (4 Marks)
4. Assuming that Job 369 consisted of 600 units of product, what is the cost per unit? (10 Marks)
5. Amounts at the end of 2013 are as follows:
Machining Department Finishing Department
Manufacturing overhead costs 13,100,000 9,360,000
Direct manufacturing labor costs 950,000 6,450,000
Machine-hours 235000 41000
Compute the under-or over allocated manufacturing overhead for each department and for the Sydney plant as a whole. (10 Marks)
6. Why might Holden use two different manufacturing overhead cost pools in its job-costing system? (4 Marks)