Carolin Chemicals produces a range of chemical products for industries on getting bulk orders. It uses a job-costing system to calculate the cost of a particular job. Materials and labors used in the manufacturing process are direct in nature, but manufacturing overhead is allocated to different jobs using direct manufacturing labor costs.

Carolin provides the following information:

1. Compute the actual and budgeted manufacturing overhead rates for 2017.
2. During March, the job-cost records for Job 635 contained the following information:

Compute the cost of Job 635 using

(a) actual costing and

(b) normal costing.
3. At the end of 2017, 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 Carolin Chemicals prefer to use normal costing?

Transcribed Image Text:

Direct material costs Direct manufacturing labor costs Manufacturing overhead costs Budget for 2017 $2,750,000 1,830,000 3,294,000 Actual Results for 2017 $3,000,000 2,250,000 3,780,000