Reference no: EM132696416
Question - The Aker Company uses a job-costing system at its Dover, Delaware, plant. The plant has a machining department and a finishing department. Aker uses normal costing with two direct-cost categories (direct materials and direct manufacturing labor) and two manufacturing overhead cost pools (the machining department with machine-hours as the allocation base and the finishing department with direct manufacturing labor hours as the allocation base). The 2020 budget for the plant is as follows:
Machining Department Finishing Department
Manufacturing overhead costs $10,360,000 $7,680,000
Direct manufacturing labor costs $970,000 $4,050,000
Direct manufacturing labor-hours 36,000 160,000
Machine-hours 185,000 37,000
Required
1. Prepare an overview diagram of Aker's job-costing system.
2. What is the budgeted manufacturing overhead rate in the machining department? In the finishing department?
3. During the month of January, the job-cost record for Job 360 shows the following:
Machining Department Finishing Department
Direct materials used $260,000 $100,000
Direct manufacturing labor costs $18,000 $250,000
Direct manufacturing labor-hours 1000 1400
Machine-hours 2800 5000
Compute the total manufacturing overhead cost allocated to Job 360.
4. Assuming that Job 360 consisted of 400 units of product, what is the cost per unit?
5. Amounts at the end of 2020 are as follows:
Machining Department Finishing Department
Manufacturing overhead incurred $10,000,000 $7,982,000
Direct manufacturing labor costs $1,030,000 $4,100,000
Direct manufacturing labor-hours 120,000 158,000
Machine-hours 186,000 34,000
Compute the under- or overallocated manufacturing overhead for each department and for the Dover plant as a whole. Make a journal entry to adjust the difference between actual and allocated manufacturing overhead for the company as a whole, assuming the difference to be small.
6. Why might Aker use two different manufacturing overhead cost pools in its job-costing system?