Job costing, accounting for manufacturing overhead, budgeted rates. The Solomon Company uses a job-costing system at its Dover plant. The plant has a Machining Department and a Finishing Department. Its job-costing system has two direct-cost cate¬

gories (direct materials and direct manufacturing labour) and two manufacturing overhead cost pools (the Machining Department, allocated using actual machine-hours, and the Finishing Department, allocated using actual labour cost). The 2007 budget for the plant is as follows:

Machining Finishing Department Department Manufacturing overhead $ 12,000,000 Direct manufacturing labour cost $ 1,080,000 Direct manufacturing labour-hours 30,000 Machine-hours 200,000

$9,600,000^

$4,800,000 160,000 33,000 Required 1. Present an overview diagram of Solomon’s job-costing system.

2. What is the budgeted overhead rate that should be used in the Machining Department? in the Finishing Department?

3. During the month ofJanuary, the cost record forJob 431 shows the following:

Machining Finishing Department Department Direct material used $16,800 $3,600 Direct manufacturing labour cost $ 720 $1,500 Direct manufacturing labour-hours 30 50 Machine-hours 130 10 What is the total manufacturing overhead allocated to Job 431?

4.Assuming thatJob 431 consisted of 200 units of product, what is the unit product cost ofJob 431? JOB COSTING 147 148 5. Balances at the end of 2007 are as follows:

Machining Finishing Department Department Manufacturing overhead incurred $13,440,000 $9,480,000 Direct manufacturing labour cost $ 1,140,000 $4,920,000 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?