Question 3) Accounting Rocks Company uses a job-costing system when producing th

Question

Question 3) Accounting Rocks Company uses a job-costing system when producing their famous rocks and paper weights. The plant has a machining department and a finishing department. Accounting Rocks uses normal costing with two direct-cost categories (direct materials and direct manufacturing labor) and two manufacturing overhead cost pools (the machining department with machine-hours as the allocation base, and the finishing department with direct manufacturing labor costs as the allocation base). The 2018 budget for th plant is as follows: Machining Department Finishing Department Manufacturing overhead costs Direct manufacturing labor costs Direct manufacturing labor-hours Machine-hours $11,437,920 $ 999,900 40,044 234,000 $ 8,766,800 $ 4,040,000 150,105 35,000 At the end of 2018, the actual amounts for the plant were determined to be as fol Machining Department Finishing Department Manufacturing overhead incurred Direct manufacturing labor costs S 942,000 37.500 255,500 $ 9,876.543 $ 4,320,100 162,040 30,330 Direct manufacturing labor-hours Machine-hours Required (round to 2 decimal places when needed 1) What is the amount of over- or under-applied manufacturing overhead for each department and for the plarnt as a whole? 2) During the month of February, the job-cost record for Job ILOVEACC3300 shows the following: Machining Department S11,011 S 509 Finishing Department Direct materials used Direct manufacturing labor costs Direct manufacturing labor-hours Machine-hours $ 4.444 $ 1,082 32 54 Assuming that Job ILOVEACC3300 consisted of 700 units of product, what is the cost per unit?

Explanation / Answer

Answer to part: 1) Computation of over or under application for manufacturing overhead Particular Machining Department Finishing Department Plant total Budgeted manufacturing overhead (A) $12,488,840 $9,374,517 $21,863,357 (255,500 * $48.88) ($4,320,100 * $ 2.17) Actual manufacturing overhead (B) $11,111,111 $9,876,543 $20,987,654 over/(under) applied (A-B) $1,377,729 ($502,026) $875,703 workings Computation budgeted overhead absorption rate Machining Departmet:              $ 11,437,920/234,000 = $ 48.88 per machine hours Finishing Department:             $ 8,766,800/4,040,000 = $ 2.17 per direct manufacturing labour cost Answer to part: 2) Computation of cost per unit of product ILOVEACC3300 Particulars Amount ($) Direct material used: Machining Department 11,011 Finishing Department 4,444 15,455 Direct manufacturing labour costs: Machining Department 509 Finishing Department 1,082 1,591 Manufacturing overhead incurred: Machining Department (107 * $ 43.49) 4,653.43 Finishing Department ($1,082 * $ 2.29) 2,477.78 7,131.21 Total cost 24,177.21 No. of units 700 Cost per unit of the product ILOVEACC3300 34.54 workings Computation actual overhead absorption rate Machining Departmet:              $ 11,111,111/255,500 = $ 43.49 per machine hours Finishing Department:             $ 9,876,543/4,320,100 = $ 2.29 per direct manufacturing labour cost

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