Question

Dakota Products uses a​ job-costing system with two direct cost categories​ (direct materials and direct manufacturing​ labour) and one manufacturing overhead cost pool.

Dakota allocates manufacturing overhead costs using direct manufacturing labour costs.

Dakota provides the following​ information

   Budget for   Actual for
   Year 2018   Year 2018
Direct manufacturing labour costs   $1,600,000    $1,550,000
Direct manufacturing overhead costs   $3,040,000    $3,177,500
Direct material costs   $2,150,000    $2,075,000

Requirement 1. Compute the actual and budgeted manufacturing overhead rates for

2018.

​(Enter the answers as dollar amounts only. Round your answer to two decimal​ places.)

Actual manufacturing overhead rate	=	2.05
Budgeted manufacturing overhead rate	=	1.90

Requirement 2. Compute the cost of Job 626 using​ (a) actual costing and​ (b) normal costing.

	Actual
	Costing
Direct materials
Direct manufacturing labour costs
Manufacturing overhead costs
Total manufacturing costs of Job 626

Answer 1

for solving this problem we assume that the whole data is pertaining to job 626 and proceeding to solve it .

as given in [probelm the manufacturing overhead is allocated based on the manufacturing labour cost . thus first we have to find out the overhead rate for budgeted manufacturing over heads .

		2018
		Budgeted	Actual
1	Direct Labour Cost	1600000	1550000
2	Direact Material cost	2150000	2075000
3	Direct over head cost	3040000	3177500
	Direct overhead cost/direct labour cost	1.9	2.05

thus we get the direct overhead absorbption rate as 1.9

R:2 ) computation of cost of job 626 . as there is no specific mention of cost details for job 626 we assume that the cost data given is of job 626 .

	Job 626 cost sheet
	Actual	Normal
Direct Labour Cost	1550000	1550000
Direact Material cost	2075000	2075000
Direct over head cost	3177500	2945000	1550000*1.9
	6802500	6570000

the actual data is already gvien in the question . for calculating the normal cost we have to take the actual cost of labour and multiply the manufacturing overhead rate for budget i.e 1.9 and derive the manufacturing overhead cost .as shown above .