The Solomon Company uses a job costing system at its Dover, Delaware plant. The plant has a machining department. Its job costing system has two direct cost categories (direct materials and direct manufacturing labour) and two manufacturing overhead cost pools (the machining department, allocated using machine hours and the finishing department, allocated using manufacturing labour costs). The 2002 budget for the plant is: Machining Dept. Finishing Dept. Manufacturing Overhead $10,000,000 $8,000,000 Direct manufacturing labour cost $900,000 $4,000,000 Direct manufacturing labour hours 30,000 160,000 Machine hours 200,000 33,000 (a) What is the budgeted overhead rate that should be used in the machining department? In the finishing department? (b) During the month of January, the cost record for job 431 shows the following: Machining Dept. Finishing Dept. Direct material used $14,000 $3,000 Direct manufacturing labour costs $600 $1,250 Direct manufacturing labour hours 30 50 Machine hours 130 10 What is the total manufacturing overhead allocated to job 431? (c) Assuming that job 431 consisted of 20 units of product, what is the unit product cost?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...

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The Solomon Company uses a job costing system at its Dover, Delaware plant. The plant has a
machining department. Its job costing system has two direct cost categories (direct materials and
direct manufacturing labour) and two manufacturing overhead cost pools (the machining
department, allocated using machine hours and the finishing department, allocated using
manufacturing labour costs). The 2002 budget for the plant is:
	Machining Dept.	Finishing Dept.
Manufacturing Overhead	$10,000,000	$8,000,000
Direct manufacturing labour cost	$900,000	$4,000,000
Direct manufacturing labour hours	30,000	160,000
Machine hours	200,000	33,000


(a) What is the budgeted overhead rate that should be used in the machining department? In
the finishing department?
(b) During the month of January, the cost record for job 431 shows the following:
	Machining Dept.	Finishing Dept.
Direct material used	$14,000	$3,000
Direct manufacturing labour costs	$600	$1,250
Direct manufacturing labour hours	30	50
Machine hours	130	10

What is the total manufacturing overhead allocated to job 431?
(c) Assuming that job 431 consisted of 20 units of product, what is the unit product cost?
(d) Balances at the end of 2002 are as follows:
	Machining Dept.	Finishing Dept.
Manufacturing overhead incurred	$11,200,000	$7,900,000
Direct manufacturing labour costs	$950,000	$4,100,000
Machine Hours	220,000	32,000

Compute the manufacturing overhead variance for each department and for the Dover

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