Mapah company allocated manufacturing overhead cost using a budgeted rate per machine hour.
The following data are available for 2007

• Budgeted manufacturing overhead costs $2.850.000
• Budgeted machine-hours 190.000
• Actual manufacturing overhead costs $2.910.000
• Actual machine hours 195.000

Required:
1. calculate the budgeted manufacturing overhead rate
2. calculate the manufacturing overhead allocated during 2007
3. calculate the amount of under or over allocated manufacturing overhead

answer:
1. budgeted manufacturing overhead rate =
budgeted manufacturing overhead costs / budgeted machine hours

$2850.000 / 190.000 = $15 per budgeted machine hour
2. manufacturing overhead allocated =
budgeted manufacturing overhead rate x actual machine hours

$15 x 195.000 = $2925.000
3. manufacturing overhead allocated – actual manufacturing overhead costs

$2.925.000 – $2.910.000 = $15.000 (over applied)

*Job costing – Accounting for manufacturing overhead

Following is the budget for the plant 2007

Machining dept
Manufacturing overhead $1.800.000
Direct manufacturing labor cost $1.400.000
Direct manufacturing labor hours 100.000
Machine hours 50.000

Assembly dept
Manufacturing overhead $3.600.000
Direct manufacturing labor cost $2.000.000
Direct manufacturing labor hours 200.000
Machine hours 200.000

Hints:
• Machining dept allocated manufacturing overhead costs using machine hours
• Assembly dept allocated manufacturing overhead costs using direct manufacturing labor hours

Required:
1. compute the budgeted manufacturing overhead rate for each department
2. at the end of 2007, the actual manufacturing overhead cost were $2.100.000 in machining dept and $3.700.000 in assembly. Assume that 55.000 actual machine hours were used in machining and that actual direct manufacturing labor cost in assembly were $2.200.000. Compute the over or under allocated manufacturing overhead for each department

answer:

1. machining dept = $1.800.000 / 50.000 = $36 per machine hour
assembly dept = $3.600.000 / 200.000 = $18 per direct labor hour

2. machining dept:
$36 x 55.000 = $1.980.000
Actual overhead = $2.100.000
($120.000) under applied

Assembly dept:
Hint: $3.600.000 / $2.000.000 = 180%

Allocated overhead = 180% x $2.200.000 = $3.950.000
Actual overhead $3.700.000
$250.000 over applied

*Job costing – unit cost – and ending work in process

Raymond company produces pipes. In april 2007, it completed all outstanding orders, and then, in may 2007, it worked on only two job M1 and M2

M1
Direct materials $75.000
Direct manufacturing labor $275.000

M2
Direct materials $50.000
Direct manufacturing labor $200.000

Direct manufacturing labor is paid at the rate of $25 per hour. Manufacturing overhead cost are allocated at a budgeted rate of $20 per direct manufacturing labor hour. Only job M1 was completed in may

Required:
1. compute the total cost of job M1
2. 1.500 pipes were produced for job M1, calculate cost per pipe
3. prepare the journal entry transferring job M1 to finished goods

answer:

1. hint: $275.000 / $25 = 11.000 hour
overhead = 11.000 x $20 = $220.000

total cost : $75.000 + $275.000 + $220.000 = $570.000

2. $570.000 / 1500 = $380 per pipe

3. finished goods $570.000
cost of goods sold $570.000

Contoh: Perusahaan kertas, Coca-Cola

Job Order Costing:
-different product
-dibuat berdasarkan pesanan
-alokasi biaya berdasarkan job

Contoh: Boeing, Walt Disney

Comparing job order & process costing

Number of job worked
Job Order:Many Process:Single product

Cost accumulated by
Job Order:Job Process:Department

Average cost computed by
Job Order:job Process:department

The predetermined overhead rate (POHR)
Used to be apply overhead to jobs is determined before the period

POHR= estimated total manufacturing overhead cost for the coming period
Estimated total units in the allocation base for the coming period

Overhead applied= POHR x actual activity

Contoh :

POHR=$10000
2500 direct labour hours

= $4 / direct labour hour