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ch04_1 a - CHAPTER 4 JOB COSTING 4-17(20 min Actual costing...

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CHAPTER 4 JOB COSTING 4-17 (20 min.) Actual costing, normal costing, accounting for manufacturing overhead. 1. Budgeted manufacturing overhead rate = costs labor ing manufactur direct Budgeted costs overhead ing manufactur Budgeted = $2,700,000 $1,500,000 = 1.80 or 185% rate overhead ing manufactur ctual A = costs labor ing manufactur direct Actual costs overhead ing manufactur Actual = $2,755,000 $1,450,000 = 1.9 or 190% 2. Costs of Job 626 under actual and normal costing follow: Actual Normal Costing Costing Direct materials $ 40,000 $ 40,000 Direct manufacturing labor costs 30,000 30,000 Manufacturing overhead costs $30,000 × 1.90; $30,000 × 1.80 57,000 54,000 Total manufacturing costs of Job 626 $127,000 $124,000 3. Total manufacturing overhead allocated under normal costing = Actual manufacturing labor costs × Budgeted overhead rate = $1,450,000 × 1.80 = $2,610,000 Underallocated manufacturing overhead = Actual manufacturing overhead costs Manufacturing overhead allocated = $2,755,000 - $2,610,000 = $145,000 There is no under- or overallocated overhead under actual costing because overhead is allocated under actual costing by multiplying actual manufacturing labor costs and the actual manufacturing overhead rate. This, of course equals the actual manufacturing overhead costs. All 4-1
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actual overhead costs are allocated to products. Hence, there is no under- or overallocatead overhead.
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