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Benedict Chemicals produces a range of chemical products for industries on getting bulk orders. It uses a job costing system to calculate the cost of

Benedict Chemicals produces a range of chemical products for industries on getting bulk orders. It uses a job costing system to calculate the cost of a particular job. Materials & labour used in the manufacturing process are traced, but manufacturing overhead to different jobs using direct manufacturing labour costs. Benedict provides the following information.

Budget 2022 Actual 2022
Direct material costs $2,750,000 $3,000,000
Direct manufacturing labour costs 1,830,000 2,250,000
Manufacturing overhead costs 3,294,000 3,780,000

Required:

a. Compute the actual & budgeted manufacturing overhead rates for 2022.

b. During May, the job-cost records for Job 365 contained the following:

Direct materials used $73,500

Direct manufacturing labour costs $51,000

Compute cost of Job 365 using i) actual costing ii) normal costing

a. At the end of 2022, compute the under- or over allocated manufacturing overhead under normal costing. Why is there no under- or ever allocated overhead under actual costing?

b. Why might managers at Benedict Chemicals prefer to use normal costing?

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