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:

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........ $ 55,000
Direct manufacturing labor costs .... $ 40,000
Compute the cost of Job 626 using
(a) Actual costing and
(b) Normal costing.
3. At the end of 2012, compute the under- or overallocated manufacturing overhead under normal costing. Why is there no under- or overallocated overhead under actual costing?
4. Why might managers at Desert Products prefer to use normalcosting?

  • CreatedJanuary 15, 2015
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