Reference no: EM132804727

Problem - ABC company follows a job-costing system at its Pune plant. The plant has a machining department and an assembly department. Its job costing system has two direct cost categories (direct materials and direct manufacturing labour) and two manufacturing overhead cost pools(the machining department overhead allocated to jobs based on actual machine hours and the assembly department overhead, allocated to jobs based on actual direct manufacturing labour cost). The 2012 budget for the plant is:

	Machining Department	Assembly Department
Manufacturing overhead	Rs 18,00,000	Rs. 36,00,000
Direct manufacturing labour cost	Rs. 14,00,000	Rs. 20,00,000
Direct manufacturing labour hours	1,00,000	2,00,000
Machine hours	2,000	1,000

Required -

a. Compute the budgeted manufacturing overhead rate for each department.

b. During February the job cost record for job 647 contained the following:

	Machining Department	Assembly Department
Direct material used	Rs.45,000	Rs. 70,000
Direct manufacturing labour Cost	Rs. 14,000	Rs. 15,000
Direct manufacturing labour Hours	1,000	1,500
Machine Hours	2,000	1,000

Compute the total manufacturing overhead costs allocated to job 647.

c. At the end of 2012, the actual manufacturing overhead costs were Rs.21,00,000 in Machining department and Rs.37,00,000 in Assembly department. Assume that 55,000 actual machine hours were used in Machining and that actual direct manufacturing labour costs in Assembly were Rs.22,00,000. Compute the over or under allocated overheads for each department.