hours as the cost allocation base for the Finishing department. Assuming the company continues to use normal costing, compute the budgeted manufacturing overhead rate for each department (E) Using the rates you computed in (D), compute the manufacturing overhead that would be allocated to Job 789. (F) Compute the total manufacturing cost of Job 789. Case #1 Molly's Manufacturing uses a normal job order costing system in its manufacturing facility. The plant has two manufacturing departments, the Cutting department and the Finishing department, Currently the company uses a normal costing system based on a single indirect cost category to allocation manufacturing costs based on machine hours as the allocation base. For 2021, the following was budgeted for the plant: (G)At the end of 2021, Molly's Manufacturing reported the following actual information for all jobs completed in the year: Cutting Finishing department department Total Manufacturing overhead costs incurred $13.294.000 $10,474,000 $23,768,000 Direct manufacturing labour hours 31,350 235.200 266,550 Machine hours 330,400 80,000 410,400 Manufacturing overhead costs Direct manufacturing labour costs Direct manufacturing labour hours Machine hours Cutting department $12,054.000 $855.000 28,500 301,350 Finishing department Total $9,450,000 $21,504,000 $6,300,000 $7,155.000 210,000 238,500 82,650 384.000 Assuming the company uses two manufacturing overhead cost pools to allocate manufacturing overhead costs, compute the over- or underallocated overhead for each department and indicate whether the amount is over- or underallocated. Required (A)Compute the budgeted manufacturing overhead rate currently used at Molly's Manufacturing. (B) During the year, the company completed Job 789 and reported the following: (H) Which method (single manufacturing overhead cost pool or two manufacturing overhead cost pools) do you recommend for Molly's Manufacturing? Why? Please explain why your choice is superior to the approach you are not recommending. Case #2 Sandro Ltd, currently uses a normal job order costing system in its manufacturing facility and allocates overhead to its two product lines, the Basic model and the Deluxe model, using a single plantwide allocation rate based on direct labour hours. For 2021, the company estimates that manufacturing overhead will be $183,200. Additional estimates for each product line for 2021 are as follows: Product Direct labour hours Direct materials Direct labour Basic 1,300 $58,000 $32.500 Deluxe 300 $76,000 $7,500 Job 789 Direct materials used Direct manufacturing labour costs Direct manufacturing labour hours Machine hours Cutting department $13,000 600 20 110 Finishing department $3.500 1800 60 15 Total S16,500 $2,400 80 125 Compute the manufacturing overhead costs allocated to Job 789. (C) Compute the total manufacturing cost of Job 789. Required (A) Compute the manufacturing overhead rate. (B) Compute the amount of overhead the company expects to allocate to each product line. (C) Compute the total manufacturing cost for each product line. (D) Ignore your previous calculations. Assume that the company's cost accounting has approached management about using two manufacturing overhead cost pools with machine hours as the cost allocation base for the Cutting department and direct labour 1 2
