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The Solomon Company Job Order Costing Systems

4-31 The Solomon Company uses a job-costing system at its Dover, Delaware, plant. The plant has a Machining Department and a Finishing Department. Solomon 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 2009 budget for the plant is as follows:
Machining Dept Finishing Dept
Manufacturing o/head costs $10,000,000 $8,000,000
Direct manufacturing labor costs $900,000 $4,000,000
Direct manufacturing labor-hours 30,000 160,000
Machine-hours 200,000 33,000

1. Prepare an overview diagram of Solomon's job-costing system.
2. What is the budgeted overhead rate in the Machining Dept? In the Finishing Dept?
3. During the month of January, the job-cost record for job 431 shows the following:

Machining Dept Finishing Dept
Direct materials used $14,000 $3,000
Direct manufacturing labor costs $600 $1,250
Direct manufacturing labor-hours 30 50
Machine-hours 130 10

Compute the total manufacturing overhead allocated to Job 431

4. Assuming that Job 431 consisted of 200 units of product, what is the cost per unit?
5. Amounts at the end of 2009 are as follows:

Machining Dept Finishing Dept
Manufacturing overhead incurred $11,200,000 $7,900,000
Direct manufacturing labor costs $950,000 $4,100,000
Machine-hours 220,000 32,000

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

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

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