Question : 21) Companies typically wait for accurate information regarding actual manufacturing : 1217174

21) Companies typically wait for accurate information regarding actual manufacturing overhead costs before pricing a job.

22) The budgeted indirect cost rate is the budgeted indirect costs divided by budgeted quantity of the cost allocation base.

23) Direct costs are traced the same way for actual costing and normal costing.

24) Normal costing assigns indirect costs based on an actual indirect-cost rate.

25) A budgeted indirect-cost rate is computed for each cost pool using budgeted indirect costs and the budgeted quantity of the cost-allocation base.

26) For normal costing, even though the budgeted indirect-cost rate is based on estimates, indirect costs are allocated to products based on actual levels of the cost-allocation base.

27) Maddow Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Patterson High School Science Olympiad Jacket job.

CompanyPatterson High School Job

Direct materials              $25,000              $500

Direct manufacturing labor              $5,000              $100

Manufacturing overhead costs              $20,000

Machine-hours              50,000              mh              800              mh

Required:

a.For Maddow Manufacturing, determine the annual manufacturing overhead cost-allocation rate.

b.Determine the amount of manufacturing overhead costs allocated to the Patterson High School job.

c.Determine the estimated total manufacturing costs for the Patterson High School job.

a.Manufacturing overhead cost-allocation rate = $0.40 per mh

= $20,000/50,000 mh

b.$320 estimated manufacturing overhead costs = 800 mh × $0.40 per mh

c.Direct materials              $500

Direct manufacturing labor              $100

Manufacturing overhead costs              $320

Estimated total manufacturing costs              $920

28) Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 20X5, the following estimates were provided for the coming year:

MachiningAssembly

Direct labor-hours              10,000              dlh              90,000dlh

Machine-hours              100,000              mh              5,000              mh

Direct labor cost              $ 80,000              $720,000

Manufacturing overhead costs              $250,000              $360,000

The accounting records of the company show the following data for Job #846:

MachiningAssembly

Direct labor-hours              50              dlh              120              dlh

Machine-hours              170              mh              10              mh

Direct material cost              $2,700              $1,600

Direct labor cost              $ 400              $ 900

Required:

a.Compute the manufacturing overhead allocation rate for each department.

b.Compute the total cost of Job #846.

c.Provide possible reasons why Hill Manufacturing uses two different cost allocation rates.