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

1. Compute the actual and budgeted manufacturing overhead rates for 2007.
2. During March, the job-cost record for Job 626 contained the following information:
Direct materials used $40,000 Direct manufacturing labor costs $30,000
Compute the cost of Job 626 using (a) actual costing and (b) normal costing.
3. At the end of 2007, compute the under- or over allocated manufacturing overhead under normal costing. Why is there no under- or over allocated overhead under actual costing?

Transcribed Image Text:

Budget for 2007 Actual Results Direct material costs Direct manufacturing labor costs Manufacturing overhead costs S1,500,000 1,000,000 1,750,000 for 2007 $1,450,000 ,862,000 980,000