4-31 (2030 min) Job costing, accounting for manufacturing overhead, budgeted rates.

1. An overview of the job-costing system is:

INDIRECT
COST
POOL
} Machining Department
Manufacturing Overhead
Finishing Department
Manufacturing Overhead

COST
}
ALLOCATION
BASE
Machine-Hours
in Machining Dept.
Direct Manufacturing
Labor Costs
in Finishing Dept.

COST
COSTOBJECT:
}
OBJECT:
PRODUCT
JOB
Indirect Costs
Direct Costs

}
DIRECT
COST
Direct
Materials
Direct
Manufacturing
Labor

2. Budgeted manufacturing overhead divided by allocation base:

a. Machining Department:

$10,660,000
= $52 per machine-hour
205,000 machine-hours

b. Finishing Department:

$7,372,000
= 194% of direct manufacturing labor costs
$3,800,000

3. Machining Department overhead, $52 130 machine-hours $6,760

Finishing Department overhead, 194% of $1,100 2,134
Total manufacturing overhead allocated $8,894

4-28