Question: Actual costing, normal costing, accounting for manufacturing overhead. Destin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Destin allocates manufacturing overhead costs using direct manufacturing labor costs. Destin provides the following information:
Budget for Actual Results
2007 for 2007
Direct material costs $1,500,000 $1,450,000
Direct manufacturing labor costs 1,000,000 980,000
Manufacturing overhead costs 1,750,000 1,862,000
1. Compute the actual and budgeted manufacturing overhead rates for 2007.
2. During March, the job-cost record for Job 626 contained the following information:
Direct materials used $40,000
Direct manufacturing labor costs $30,000
Compute the cost of Job 626 using (a) actual costing and (b) normal costing.
3. At the end of 2007, compute the under- or overallocated manufacturing overhead under normal costing.
Why is there no under- or overallocated overhead under actual costing?
ISBN: 0-536-12110-9