Calculate the under- or overallocated manufacturing overhead for each department

Job costing, accounting f or manufacturing overhead, budgeted rates.

Giannacopoulos SA uses a job-costing system at its Korinthos 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 labour) and two manufac-

turing overhead cost pools (the Machining Department, allocated using actual machine-hours, and the Assembly Department, allocated using actual labour cost). The

2007 budget for the plant is as follows:

Machining Assembly

Department Department

Manufacturing overhead €1 800 000 €3 600 000
Direct manufacturing labour cost €1 400 000 €2 000 000
Direct manufacturing labour-hours €100 000 €200 000
Machine-hours 50 000 200 000

Required

1 Present an overview diagram of Giannacopoulos’s job-costing system. What is the bud- geted overhead rate that should be used in the Machining Department? In the Assembly Department?

2 During the month of February, the cost record for Job 494 shows the following:

Machining Assembly

Department Department

Direct material used €45 000 €70 000
Direct manufacturing labour cost €14 000 €15 000
Direct manufacturing labour-hours 1 000 1 500
Machine-hours 2 000 1 000

What is the total manufacturing overhead allocated to Job 494?

3 Balances at the end of 2007 are as follows: Machining Assembly
Department Department
Manufacturing overhead incurred €2 100 000 €3 700 000
Direct manufacturing labour cost €2 200 000
Machine-hours 55 000

Calculate the under- or overallocated manufacturing overhead for each department

 

 

 

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