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 2011 |
Actual Results for 2011 |
|
|
Direct material costs |
$2,000,000 |
$1,900,000 |
|
Direct manufacturing labor costs |
1,500,000 |
1,450,000 |
|
Manufacturing overhead costs |
2,700,000 |
2,755,000 |
1. Compute the actual and budgeted manufacturing overhead rates for 2011.
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 2011, compute the under or over allocated manufacturing overhead under normal costing. Why is there no under or over allocated overhead under actual costing?