Desert Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Desert allocates manufacturing overhead costs using direct manufacturing labor costs. Desert provides the following information: (Click the icon to view the information.) Read the requirements Requirement 1. Compute the actual and budgeted manufacturing overhead rates for 2017. (Enter your answer as a number (not as a percentage] rounded to two decimal places, X.XX.) Data Table Actual manufacturing overhead rate Budgeted manufacturing overhead rate Requirement 2. During March, the job-cost record for Job 626 contained the following information: Direct materials used Direct manufacturing labor costs Compute the cost of Job 626 using (a) actual costing and (b) normal costing. $40,000 $30,000 Direct material costs $ Budget for 2017 Actual Results for 2017 2,300,000 $ 2,150,000 1,750,000 1,675,000 3.412,500 3.433.750 Direct manufacturing labor costs Manufacturing overhead costs Actual Normal Costing Costing Direct materials Print Done Direct manufacturing labor costs Manufacturing overhead costs Total manufacturing costs of Job 626 Requirement 3. At the end of 2017, compute the under-or overallocated manufacturing overhead under normal costing. Why is there no under- or overallocated overhead under actual costing? Under normal costing, manufacturing overhead is by $ Why is there no under-or overallocated overhead under actual costing? There is no under-or overallocated overhead under actual costing because overhead is allocated under actual costing by multiplying manufacturing labor costs and the manufacturing overhead rate. Requirement 4. Why might managers at Desert Products prefer to use normal costing? (Choose all that apply.) A. Normal costing provides managers with information at the end of a fiscal year when they know actual manufacturing overhead costs. This approach is preferable to managers to improve the company's spending efficiency and increase overall profits. B. Normal costing provides managers with information earlier-while there is still time to take corrective actions, such as improving the company's labor efficiency or reducing the company's overhead costs. OC. Normal costing allows managers to allocate overhead costs at the end of the accounting year. This allows Desert Products to use the normal costs incurred to provide an accurate costing method so that adjustments will not need to be made at the end of the accounting year. OD. Normal costing enables Desert Products to use the budgeted manufacturing overhead rate determined at the beginning of the year to estimate the cost of a job as soon as the job is completed. Managers want to know job costs for ongoing uses, including pricing jobs, monitoring and managing costs, evaluating the success of the job, learning about what did and did not work, bidding on new jobs, and preparing interim financial statements E. Manufacturing costs of a job are available much earlier in a normal costing system. Consequently, Desert's manufacturing and sales managers can evaluate the profitability of different jobs, the efficiency with which the jobs are done, and the pricing of different jobs as soon as they are completed, while the experience is still fresh in everyone's mind
