4-36 Job costing, accounting for manufacturing overhead, budgeted rates. 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 2017 budget for the plant is as follows:

Machine Department Finished Department

Manufacturing Overhead Cost 10,660,000 8,000,000

Direct Manufacturing labor cost 970,000 4,000,000

Direct Manufacturing labor-hours 26,000 160,000

Machine Hours 205,000 31,000

Required:

1: Prepare an overview diagram of Solomons job-costing system.

2: What is the budgeted manufacturing overhead rate in the machining department? In the finishing department?

3: During the month of January, the job-cost record for Job 431 shows the following:

Machine Department Finished Department

Direct Materials Used 16,150 3,000

Direct Manufacturing labor cost 350 1,300

Direct Manufacturing labor-hours 30 50

Machine Hours 150 20

Compute the total manufacturing overhead cost allocated to Job 431.

4: Assuming that Job 431 consisted of 400 units of product, what is the cost per unit?

5: Amounts at the end of 2017 are as follows:

Machine Department Finished Department

Manufacturing Overhead incurred 13,250,000 8,400,000

Direct Manufacturing labor cost 1,000,000 4,300,000

Machine Hours 250,000 30,000

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?