E4-19 (Budgeted Manufacturing Overhead Rate, Allocated Manufacturing Overhead, pages 127-128) (Horngren, Datar, & Rajan, 2012) Gammaro Company uses normal costing. It allocates manufacturing overhead costs using a budgeted rate per machine-hour. The following data are available for 2011: Budgeted manufacturing overhead costs Budgeted machine-hours Actual manufacturing overhead costs Actual machine-hours $4,200,000 175,000 $4,050,000 170,000 Required Calculate the budgeted manufacturing overhead rate. Calculate the manufacturing overhead allocated during 2011. Calculate the under- or overallocated manufacturing overhead. E4-23 (Accounting for Manufacturing Overhead, page 129)Consider the following selected cost data for the Pittsburgh Forging Company for 2011. Budgeted manufacturing overhead costs Budgeted machine-hours Actual manufacturing overhead costs Actual machine-hours $7,500,000 250,000 $7,300,000 245,000 The company uses normal costing. Its job-costing system has a single manufacturing overhead cost pool. Costs are allocated to jobs using a budgeted machine-hour rate. Any amount of under- or overallocation is written off to Cost of Goods Sold. Required Compute the budgeted manufacturing overhead rate. Prepare the journal entries to record the allocation of manufacturing overhead. Compute the amount of under- or overallocation of manufacturing overhead. Is the amount material? Prepare a journal entry to dispose of this amount. E4-24 (Job Costing, Journal Entries, pages 129-130) The University of Chicago Press is wholly owned by the university. It performs the bulk of its work for other university departments, which pay as though the press were an outside business enterprise. The press also publishes and maintains a stock of books for general sale. The press uses normal costing to cost each job. Its job-costing system has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost pool (manufacturing overhead, allocated on the basis of direct manufacturing labor costs). The following data (in thousands) pertain to 2011: Direct materials and supplies purchased on credit Direct materials used Indirect materials issued to various production departments Direct manufacturing labor Indirect manufacturing labor incurred by various production departments Depreciation on building and manufacturing equipment Miscellaneous manufacturing overhead incurred by various production departments (ordinarily would be detailed as repairs, photocopying, utilities, etc.) Manufacturing overhead allocated at 160% of direct manufacturing labor costs Cost of goods manufactured Revenues Cost of goods sold (before adjustment for under- or overallocated manufacturing overhead) Inventories, December 31, 2010 (not 2011): Materials Control Work-in-Process Control Finished Goods Control $800 710 100 1,300 900 400 550 ? 4,120 8,000 4,020 100 60 500 Required Prepare an overview diagram of the job-costing system at the University of Chicago Press. Prepare journal entries to summarize the 2011 transactions. As your final entry, dispose of the year-end under- or overallocated manufacturing overhead as a write-off to Cost of Goods Sold. Number your entries. Explanations for each entry may be omitted. Show posted T-accounts for all inventories, Cost of Goods Sold, Manufacturing Overhead Control, and Manufacturing Overhead Allocated. E4-29 (Job-order Costing: Actual, Normal, and Variation from Normal Costing, pages 131-132) Braden Brothers, Inc., is an architecture firm specializing in high-rise buildings. Its job-costing system has a single direct-cost category (architectural labor) and a single indirect-cost pool, which contains all costs of supporting the office. Support costs are allocated to individual jobs using architect labor-hours. Braden Brothers employs 15 architects. Budgeted and actual amounts for 2010 are as follows: Required Compute the direct-cost rate and the indirect-cost rate per architectural labor-hour for 2010 under (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs. Braden Brother’s architectural sketches for Champ Tower in Houston was budgeted to take 275 hours of architectural labor time. The actual architectural labor time spent on the job was 250 hours. Compute the cost of the Champ Tower sketches using (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs.
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