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

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

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

Explanation / Answer

A) The 2010 budgeted manufacturing overhead rate = Estimated manufacturing overhead costs / Machine hours

= $ 200,000 / 40,000 = $ 5 per machine hour

B) The amount of manufacturing overhead costs allocated to jobs during 2010 = Actual machine hours x predetermined manufacturing overhead rate = 50,000 x $ 5 = $ 250,000

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