ch04sol - 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. rate overhead ing manufactur d Budgete = costs labor ing manufactur direct Budgeted costs overhead ing manufactur Budgeted = 000 , 000 , 1 $ 000 , 750 , 1 $ = 1.75 or 175% rate overhead ing manufactur ctual A = costs labor ing manufactur direct Actual costs overhead ing manufactur Actual = 000 , 980 $ 000 , 862 , 1 $ = 1.9 or 190% 2. Costs of Job 626 under actual and normal costing follow: Actual Normal CostingCosting Direct materials $ 40,000 $ 40,000 Direct manufacturing labor costs 30,000 30,000 Manufacturing overhead costs $30,000 × 1.90; $30,000 × 1.75 57,000 52,500 Total manufacturing costs of Job 626 $127,000 $122,500
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3. Total manufacturing overhead allocated under normal costing = Actual manufacturing labor costs × Budgeted overhead rate = $980,000 × 1.75 = $1,715,000 Underallocated manufacturing overhead = Actual manufacturing overhead costs Manufacturing overhead allocated = $1,862,000 - $1,715,000 = $147,000 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 actual overhead costs are allocated to products. Hence, there is no under- or overallocatead overhead. 4-18 (20 -30 min.) Job costing, normal and actual costing. 1. Budgeted indirect- cost rate = Budgeted indirect costs Budgeted direct labor-hours = hours 160,000 $8,000,000 = $50 per direct labor-hour Actual indirect- cost rate = Actual indirect costs Actual direct labor-hours = hours 164,000 $6,888,000 = $42 per direct labor-hour These rates differ because both the numerator and the denominator in the two calculations are different—one based on budgeted numbers and the other based on actual numbers. 2a. Laguna Model Mission Model Normal costing Direct costs Direct materials Direct labor Indirect costs Assembly support ($50 × 900; $50 × 1,010) Total costs $106,450 36,276 142,726 45,000 $187,726 $127,604 41,410 169,014 50,500 $219,514
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2b. Actual costing Direct costs Direct materials Direct labor Indirect costs Assembly support ($42 × 900; $42 × 1,010) Total costs $106,450 36,276 142,726 37,800 $180,526 $127,604 41,410 169,014 42,420 $211,434 3. Normal costing enables Anderson to report a job cost as soon as the job is completed, assuming that both the direct materials and direct labor costs are known at the time of use. Once the 900 direct labor-hours are known for the Laguna Model (June
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