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The Morris Company uses a Job-costing system at one of its plants

Posted on Posted in Accounting, ACT202 Introduction to Managerial Accounting, Case Studies

The Morris Company uses a Job-costing system at one of its
plants.  The plant has a machining department and a
finishing department.  The company uses a normal costing
system with two direct-cost categories and two manufacturing
overhead cost pools; the machining department using  machine
hours as its allocation base, and the finishing department uses
direct manufacturing labor costs as its allocation base.

 

The 2013 budget is as follows:
Machining Department Finishing Department
Manufacturing Overhead Costs:  $        10,660,000  $           7,372,000
Direct Manufacturing Labor Costs:  $              940,000  $           3,800,000
Direct Manufacturing Labor-Hours                     36,000                   145,000
Machine-Hours                   205,000                     32,000
Question 1:  What is the budgeted MOH rate in the machining
  department?
Question 2:  What is the budgeted MOH rate in the finishing
  department?
Given #3:  During the month of January, note the following costs
for Job 0113:
Machining Department Finishing Department Total
Direct Materials Used  $                 15,500  $                   5,000
Direct Manufacturing Labor Costs  $                       400  $                   1,100
Direct Manufacturing Labor-Hours 50 50
Machine-Hours 130 20
Question 3:  Determine the manufacturing overhead cost
allocated in Jan to each department, and the total MOH.
Question 3a:  Determine the total costs for Jan for each
department and the total cost for Job 0113
Question 4:  Assuming the Job 0113 consisted of 400 units of
product, what is the cost per unit?
Given #5: Actual MOH
Actual total MOH for both departments for 2013:  $        19,706,000
Actual total machine-hours for 2013:                   210,000
Actual total direct labor costs for 2013:  $           4,400,000
Question 5a:  What is the total allocated MOH for 2013:
(Budgeted rate times Actual hours or Actual labor costs)
Question 5b:
Given the actual total manufacturing overhead cost for 2013,
determine the under- or over-allocated manufacturing overhead
for Job 0113
(MOH Control is debited for Actual MOH costs)
(MOH Allocated is credited for the total allocated costs)
Question 5c:
If the under- or over-allocated MOH cost for 2013 is written off
completely to COGS, what is the year-end journal entry?
(net the two costs to determine debit or credit to COGS)

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