Question

The Xio Company uses a job-costing system at its plant. The plant has a forming department and a boxing department. Xio uses normal costing with two direct-cost categories (direct materials and direct manufacturing labor) and two manufacturing overhead cost pools (the Forming department with machine-hours as the allocation base and the Boxing department with direct manufacturing labor costs as the allocation base). The 2017 budget for the plant is as follows:

Forming

Department

Boxing Department

Manufacturing overhead costs

$21,662,500

$20,452,500

Direct manufacturing labor costs

$ 2,425,000

$7,181,000

Direct manufacturing labor-hours

45,000

193,750

Machine-hours

231,250

46,250

1. What is the budgeted manufacturing overhead rate in the Forming department?

2. What is the budgeted manufacturing overhead rate in the Boxing department?

3. During the month of March, the job-cost record for Job 232 shows the following:

Forming

Department

Boxing

Department

Direct materials used

$32,500

$12,500

Direct manufacturing labor costs

$ 2,250

$3,125

Direct manufacturing labor-hours

25

90

Machine-hours

175

25

Compute the total manufacturing overhead cost allocated to Job 232.

4. Assuming that Job 232 consisted of 400 units of product, what is the total cost per unit?

5. Amounts at the end of 2017 are as follows:

Forming

Department

Boxing Department

Manufacturing overhead incurred

$25,000,000

$19,950,000

Direct manufacturing labor costs

$ 2,575,000

$8,250,000

Machine-hours

250,000

42,500

Compute the under- or overallocated manufacturing overhead for each department and for the plant as a whole.

6. Mention 2 advantages of having two different manufacturing overhead cost pools in its job-costing system and on what basis these pools are created?

Answer 1

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