Exam 4: Job Costing

Use the information below to answer the following question(s). Because the Abernathy Company used a budgeted indirect cost allocation rate for its manufacturing operations, the amount allocated ($200,000) was different from the actual amount incurred ($225,000). Before disposition of under/overallocated overhead, the following information was available: -What is the journal entry used to write-off the difference between allocated and actual overhead directly to cost of goods sold?

The difference between the actual costing and normal costing methods is that actual costing uses a budgeted indirect cost rate while normal costing uses an actual indirect cost rate.

Normal costing refers to

A local attorney employs ten full-time professionals. The budgeted compensation per employee is $75,000. The maximum billable hours for each client are 200. Clients always receive their full amount of time. All professional labour costs are included in a single direct cost category and are traced to jobs on a per-hour basis. Any other costs are included in a single indirect cost pool, allocated according to professional labour-hours. Budgeted indirect costs for the year are $1,000,000 and the firm had 20 clients. Required: a. What is the direct labour budgeted cost rate per hour? b. What is the indirect cost pool budgeted cost rate per hour?

Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labour hours in the Assembly Department. At the beginning of 2012, the following estimates were provided for the coming year: The accounting records of the company show the following data for Job #846: Required: a. Compute the manufacturing indirect cost allocation rate for each department. b. Compute the total cost of Job #846. c. Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.

Based on the following data, calculate the actual indirect cost rate, using direct labour hours as the allocation base.

What is the budgeted direct cost rate per hour for professional partner labour?

A machine shop has direct materials cost of $1,800,000 direct labour of $4,200,000 (direct labour rate is $50 per hour) and budgeted indirect manufacturing costs of $850,000. Management believes that indirect manufacturing costs increase with direct labour hours. What is the budgeted indirect manufacturing cost rate?

Use the information below to answer the following question(s). Jim's Computer Products manufactures keyboards for computers. In June, the two production departments had budgeted allocation bases of 10,000 machine hours in Department 1 and 5,000 direct manufacturing labour hours in Department 2. The budgeted manufacturing overheads for the month were $34,500 and $37,500, respectively. For Job 501, the actual costs incurred in the two departments were as follows: Job 501 incurred 1,000 machine hours in Department 1 and 300 manufacturing labour hours in Department 2. The company uses a budgeted departmental overhead rate for applying overhead to production. -The difference between actual costing and normal costing is

In a costing system

Which of the following is one of the steps used in assigning manufacturing overhead costs to individual jobs?

The Work-in-Process Control account tracks job costs from the time jobs are started until they are completed.

A cost allocation base is only financial in nature, and is usually the cost driver of the particular costs being measured.

Which of the following would be appropriately costed using a process costing system?

The cost driver of an indirect cost is often used as the cost allocation base.

A local financial consulting firm employs 30 full-time employees. The budgeted compensation per employee is $50,000. The annual maximum chargeable time to each client is 1,000 hours. Clients always receive their full amount of time. All labour costs are included in a single direct-cost category and are traced to jobs on a per-hour basis. Any other costs are included in a single indirect-cost pool, allocated according to professional labour-hours. Budgeted indirect costs for the year are $1,050,000, and the firm expects to have 60 clients during the coming year. What is the budgeted indirect-cost rate per hour?

Which method for dealing with under/over allocated overhead provides the most accurate individual job cost records?

A company's manufacturing overhead control account balance at the fiscal period end is a $905,000 debit, its work-in-process control is $75,000, and the manufacturing overhead allocated is $850,000. Direct manufacturing labour was 10,000 hours, and the budget rate is $85 per hour. Required: Calculate the total amount of over or underallocated overhead to be adjusted and specify whether the manufacturing overhead control account should be debited or credited for the adjustment.

Normandeau Company's actual indirect cost pool amounted to $1,400,000 and the direct labour pool was $5,400,000. Overhead is allocated on the basis of direct labour hours. Actual and budgeted direct labour hours were 25,000 and 30,000 for the period. What is the manufacturing overhead cost allocation rate using actual direct labour hours as the cost allocation base?

Last week Job # WPP 298 was charged: DM of $4,606; DL of $1,579; and, MOH of $3,960 based on machine hours. The materials requisition record for this week showed an additional purchase of 10 brackets at a unit cost of $16; the direct labour costs were the same as the first week; and, the total machine hours for both weeks are now 140 hours at $45 per machine hour. Calculate the revised total job cost. (direct materials + direct labour + manufacturing overhead).