Question

The Bennett Company uses a​ job-costing system at its​ Dover, Delaware, plant. The plant has a machining department and a finishing department. Bennett 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 2017 budget for the plant is as​ follows:

	Machining Department	Finishing Department
Manufacturing overhead costs	$ 9,065,000	$ 8,058,000
Direct manufacturing labor costs	$ 950,000	$ 3,950,000
Direct manufacturing labor-hours	32,000	145,000
Machine-hours	185,000	35,000

Question:

1. Identify the components of the overview diagram of Bennett​'s ​job-costing system.

2. What is the budgeted manufacturing overhead rate in the machining​ department? In the finishing​department?

3. During the month of​ January, the​ job-cost record for Job 431 shows the​ following:

	Machining Department	Finishing Department
Direct materials used	$ 14,500	$ 4,000
Direct manufacturing labor costs	$ 800	$ 1,400
Direct manufacturing labor-hours	20	70
Machine-hours	100	15

Compute the total manufacturing overhead cost allocated to Job 431.

4. Assuming that Job 431 consisted of 100 units of​ product, what is the cost per​ unit?

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

	Machining Department	Finishing Department
Manufacturing overhead incurred	$ 12,010,000	$ 9,184,000
Direct manufacturing labor costs	$ 980,000	$ 4,600,000
Machine-hours	240,000	33,0000

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

6. Why might Bennett use two different manufacturing overhead cost pools in its​ job-costing system?

Answer 1

2	Budgeted manufacturing overhead rate :
	In Machining Department = Manufacturing overhead cost / Machine hrs
	$9065000 /185,000 = $49 per machine hour
	In Finishing Department = Manufacturing overhead cost / Direct Manufacturing labor cost
	$8,058000 / $3950,000 = 2.04
3).	Machining Department overhead = $20 per machine hr * 100 hrs = $2000
	Finishing Department overhead = $1400 * 204% = $2856
	Total manufacturing overhead = $4856
4).	Total costs of Job 431:
	Direct material - Machining Department = $14500
	- Finishing Department = $4000
	Direct manufacturing labor - Machining Department = $800
	- Finishing Department = $1400
	Manufacturing overhead = $4856
	Total Cost = $25556
	Cost per unit = $25556 / 100 = $255.56
5
	Actual manufacturing overhead	machining	finishing
	Actual manufacturing overhead	$12,010,000	$9,184,000
	Manufacturing overhead allocated	$11,760,000	$9,384,000
		($49×240,000)	(204%×4600,000)
	Under allocated(over allocated)	$250,000	$                    (200,000.00)
	For plant as whole:
	(12,010,000+$9184,000)-(11760,000+$9384,000)
	50000 Under applied.
6	In machining department main focal points is machines , so machine hours is selected for this.In finishing department, labor cost is key area.so it is selected by the company .In both department key area is different so different cost drivers are selected for both departments.