X company uses a job costing system at its plant. The plant has a production dep
ID: 2424554 • Letter: X
Question
X company uses a job costing system at its plant. The plant has a production department and packaging department. Its job costing system has two direct cost categories and two overhead cost pools (production overhead is allocated on the basis of direct labor hours and packaging department overhead is allocated based on units.) The 2011 budget for the plant is
During August, the job cost record for job X, contained the following
The actual results for the year 2011 were:
1) Compute the total manufacturing overhead costs allocated to job X using Normal costing.
2.)Assume Job X was completed and the job cost ticket is complete.. What is the cost of the job using normal costing?
3.)Compute the over or under allocated overhead for each department for the year 2011.
budgeted Production Packaging Overhead $1,000,000 1,500,000 Direct Labor $1,250,000 300,000 Direct Labor hours 50,000 20,000 Units 200,000 200,000Explanation / Answer
1) Under normal costing pre-determined overhead rates are applied to the actual base.
The predetermined overhead rates are:
production department = budgeted overhead/budgeted labour hours = 1000000/50000 = $20 per direct labor hour packaging department = budgeted overhead/budgeted units = 1500000/200000 = $7.5 per unit
The overhead cost allocated to job x is
production department = actual base experienced * predetermined rate = 20*1200 = $ 24,000
packaging department = 1000*7.5 = $7500
2) The cost of the job using normal costing = $213,300
The work sheet is given below:
3) Production department---underallocted overhead = $60,000
Packaging department---overallocated overhead = $7,500
Workings are given below:
COST FOR JOB X production packaging total Direct materials (as given) 100000 50000 150000 Direct labour 1200*25 30000 30000 120*15 1800 1800 Overhead 1200*20 24000 24000 1000*7.5 7500 7500 154000 59300 213300Related Questions
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