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Job Costing, Accounting for Manufacturing OH

The Lynn Company uses a job-costing system at its Minneapolis plant. The plant has has a Machining Department and an Assembly Department. Its job-costing system has two direct-cost cateories (direct materials and direct manufacturing labor) and two manufacturing overhead cost pools (the Machining Department overhead, allocated to jobs based on actual machine-hours, and the Assembly Department overhead, allocated to jobs based on actual direct manufacturing labor costs). The 2009 budget for the plant is:
Machining Dept Assembly Dept

Manufacturing OH $1,800,000 $3,600,000
Direct Manufacturing Labor Costs $1,400,000 $2,000,000
Direct Manufacturing Labor Hours $100,000 $200,000
Machine-hours $50,000 $200,000

1. Present an overview diagram of Lynn's job-costing system. Compute the budgeted manufacturing OH rate for each department.
2. During February, the job-cost record for Job 494 contained the following:

Machining Dept Assembly Dept

Direct Materials Used $45,000 $70,000
Direct Manufacturing Labor Costs $14,000 $15,000
Direct Manufacturing Labor Hours 1,000 1,500
Machine-hours 2,000 1,000

Compute the total manufacturing overhead costs allocated to Job 494.

3. At the end of 2009, the actual manufacturing overhead costs were $2,100,000 in Machining and $3,700,000 in Assembly. Assume that 55,000 actual machine-hours were used in Machining and that actual direct manufacturing labor costs in Assembly were $2,200,000. Compute the over- or under-allocated manufacturing overheard for each department.

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Job Costing, Accounting for Manufacturing OH, budgeted rates
The Lynn Company uses a job-costing system at its Minneapolis plant. The plant has a Machining Department and an Assembly Department. Its job-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and two manufacturing overhead cost pools (the Machining Department overhead, allocated to jobs based on ...

Solution Summary

This solution provides a detailed, step by step explanation of the given accounting problems.

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