Question

Marblex manufactures marble statues. In March, the two production departments had budgeted allocation bases of 4,000 machine-hours in Department X and 8,000 direct manufacturing labor-hours in Department Y. The budgeted manufacturing overheads for the month were $60,000 and $64,000, respectively. For Job A, the actual costs incurred in the two departments were as follows:

                                                                                    Department X          Department Y

    Direct materials purchased on account            $110,000                     $177,500

    Direct materials used                                            40,000                         13,500

    Direct manufacturing labor                                    55,000                         53,500

    Indirect manufacturing labor 11,000                            9,000

    Indirect materials used 5,000                            4,750

    Lease on equipment    16,250                            3,750

    Utilities 1,000                            1,250

Job A incurred 800 machine-hours in Department X and 300 manufacturing labor-hours in Department Y. The company uses a budgeted overhead rate for applying overhead to production.

Required:

a.    Determine the budgeted manufacturing overhead rate for each department.

b.    Prepare the necessary journal entries to summarize the March transactions for Department X.

c.     What is the total cost of Job A?

Answer 1

1) Budgeted Manufacturing Overhead Rate for each Department.

Particulars	Dept. X	Dept. Y
Direct Manufacturing Labor - Hours (a)	4000	8000
Budgeted Manufacturing Overheads (b)	$60000	$64000
Budgeted Manufacturing Overhead Rate Per Hour (b/a)	$15	$8

2)

Particulars	Debit($)	Credit($)
Materials Control A/c Dr.	110000
To Accounts Payable A/c		110000
Work in Proess A/c Dr.	40000
Manufacturing Overhead A/c Dr.	5000
To Materials Control A/c		45000
Work in Process A/c Dr.	55000
Manufacturing Overhead A/c Dr.	11000
To Wages Payable A/c		66000
Manufacturing Overhead A/c Dr.	17250
To Leaseholds Payable A/c		16250
To Utilities Payable A/c		1000
Work in Process A/c Dr. (800*$15)	12000
To Manufacturing Overhead Allocated A/c		12000

3) Total Cost of Job A :-

Particulars	Dept. X	Dept. Y
Diect Materials	$40000	$13500
Direct Manufacturing labor	$55000	$53500
Manufacturing Overhead	$12000	$2400
Total Cost for each Department	$107000	$69400
Total Cost of Job A ($107000+$69400)	176400