PLEASE SHOW WORK! For 2010, Jake\'s Dog Supply Manufacturing uses machine-hours

Question

PLEASE SHOW WORK!

For 2010, Jake's Dog Supply Manufacturing uses machine-hours as the only overhead cost-allocation base. The accounting records contain the following information:

                                                                      Estimated          Actual

            Manufacturing overhead costs         $200,000         $240,000

            Machine-hours                                     40,000             50,000

Using job costing, the 2010 budgeted manufacturing overhead rate is:

Using normal costing, the amount of manufacturing overhead costs allocated to jobs during 2010 is:

Explanation / Answer

Under Job Costing, manufacturing overhead rate is computed as follows-:

Estimated Manufacturing Overhead Cost

-------------------------------------------------------

        Estimated Budgeted Hours

=                         $    200,000

                        -------------

                            40,000

= $ 5 per machine hour

Using normal costing, the amount of manufacturing overhead costs allocated to jobs during 2010 is:

= 50,000 machine hours * $ 5 per machine hour

= $ 250,000

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