Dimanche uses labor hours to allocate costs from Cost Pool #1, and machine hours to allocate costs from Cost Pool #2.

The following jobs were started during the year:

Job A1 Prime costs             $20,000 Labor hours                 5,000 Machine hours         12,000	Job A2 Prime costs            $32,000 Labor hours                8,000 Machine hours        20,000
Job A3 Prime costs             $26,000 Labor hours                6,500 Machine hours         13,000	Job A4 Prime costs            $29,000 Labor hours                6,000 Machine hours          9,000
Job A5 Prime costs            $18,000 Labor hours               2,400 Machine hours             540	Job A6 Prime costs           $38,000 Labor hours            10,000 Machine hours      30,000

Jobs A3 and A5 were still in process at the end of the year.  Job A4 was completed, but had not been sold at the end of the year.  

Actual indirect cost information for the year:

Indirect Cost Pool #1    $  65,000

Indirect Cost Pool #2    $178,000

Assume any over or underapplied overhead amounts are material.

E.  Use the Allocated (Applied) Overhead pro-ration method to dispose of the over or under applied overhead.  Make the necessary journal entries, in good form.  (Note: when allocating over or underapplied overhead using the Allocated Overhead method each cost pool must be allocated separately.)

F.  Use the Adjusted Allocation Rate (Actual Allocation) method to determine the net adjustment to each job.  Do not prepare the journal entries.  What is the benefit of using this method?

G.  Calculate the total manufacturing cost that will appear as cost of goods sold on Dimanche’s income statement using 1) the allocations from D and 2) the allocations from E.

Answer rating: 100% (QA)

E Job A1 Prime costs 20000 Labor hours 5000 Machine hours 12000 Indirect costs 22000 Job A2 Prime co... View the full answer