Destin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Destin allocates manufacturing overhead costs using direct manufacturing labor costs. Destin provides the followinginformation:

Budget Results for 2012 Actual Results for 2012

Direct material costs $2,350,000 $2,225,000

Direct manufacturing labor costs 1,450,000 1,375,000

Manufacturing overhead costs 2,537,500 2,543,750

Required.

1. Compute the actual and budgeted manufacturing overhead rates for 2012.

2. During March, the job-cost record for Job 626 contained the following information:

Direct materials used $50,000

Direct manufacturing labor costs $35,000

Compute the cost of Job 626 using (a) actual costing and (b) normal costing.

3. At the end of 2012, compute the under-or over-allocated manufacturing overhead under normal costing. Why is there no under-or over-allocated overhead under actual costing?

4. Why might managers at Destin Products prefer to use normal costing?