Dakota Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Dakota allocates manufacturing overhead costs using direct manufacturing labor costs. Dakota provides the following information:

Required
1. Compute the actual and budgeted manufacturing overhead rates for 2017.
2. During March, the job-cost record for Job 626 contained the following information:
Direct materials used..............................................$55,000
Direct manufacturing labor costs................................$45,000
Compute the cost of Job 626 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 manufacturing overhead under actual costing?
4. Why might managers at Dakota Products prefer to use normal costing?

Transcribed Image Text:

Direct material costs Direct manufacturing labor costs Manufacturing overhead costs Budget for 2017 $2,250,000 1,700,000 3,060,000 Actual Results for 2017 $2,150,000 1,650,000 3,217,500