The Lynn Company uses a normal job-costing system at its Minneapolis 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 labor) and two manufacturing overhead cost pools (the machining department overhead, allocated to jobs based on actual machine-hours, and the assembly department overhead, allocated to jobs based on actual direct manufacturing labor costs). The 2014 budget for the plant is as follows:

Required
1. Present an overview diagram of Lynn’s job-costing system. Compute the budgeted manufacturing overhead rate for each department.
2. During February, the job-cost record for Job 494 contained the following:

Compute the total manufacturing overhead costs allocated to Job 494.
3. At the end of 2014, 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 that­actual direct manufacturing labor costs in assembly were $2,200,000. Compute the over-or underallocated manufacturing overhead for eachdepartment.

Transcribed Image Text:

Machining DepartmentAssembly Department Manufacturing overhead Direct manufacturing labor costs Direct manufacturing labor-hours Machine-hours $1,800,000 $1,400,000 100,000 50,000 3,600,000 $2,000,000 200,000 200,000 Machining DepartmenAsembly Department Direct materials used Direct manufacturing labor costs Direct manufacturing labor-hours Machine-hours 45,000 $14,000 1,000 2000 $70,000 $15,000 1,500 1,000