Question
Somerset Products uses a job costing system with two direct cost categories and one manufacturing overhead cost pool. Somerset allocates manufacturing overhead costs using direct
Somerset Products uses a job costing system with two direct cost categories and one manufacturing overhead cost pool. Somerset allocates manufacturing overhead costs using direct manufacturing labor costs.
The following information pertains to the year 2018:
| Budget | Actual |
Direct material costs | $2,150,000 | $2,075,000 |
Direct manufacturing labor costs | $1,750,000 | $1,690,000 |
Manufacturing overhead costs | $3,062,500 | $3,211,000 |
The following information pertains to Job GWH undertaken in May 2018:
| Budget | Actual |
Direct materials used | $35,000 | $35,000 |
Direct manufacturing labor costs | $25,000 | $30,000 |
- Compute the cost of Job GWH using normal costing.
b. For the year 2018, compute the under- or overallocated manufacturing overhead under normal costing. (indicate the amount and if it is under- or overallocated)
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