Lynn Company uses a job costing system at its Mississauga plant
Lynn Company uses a job-costing system at its Mississauga plant. The plant has a Machining Department and an Assembly Department. Its job-costing system has two direct cost categories (direct materials and direct manufacturing labour) and two manufacturing overhead cost pools (the Machining Department, allocated using actual machine hours (MH), and the Assembly Department, allocated using actual direct manufacturing labour cost). The 2013 budget for the plant is as follows:
The company uses a budgeted overhead rate for allocating overhead to production orders on a machine-hour basis in Machining and on a direct-manufacturing-labour-cost basis in Assembly.
1. During February, the cost record for Job 494 contained the following:
Compute the total manufacturing overhead costs of Job 494.
2. At the end of 2013, the actual manufacturing overhead costs were $2,100,000 in Machining and $3,700,000 in Assembly. Assume that 55,000 actual machine hours were used in Machining and that actual direct manufacturing labour costs in Assembly were $2,200,000. Compute the over-allocated or under-allocated manufacturing overhead for each department.
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