Reference no: EM131802921
Lynn Ltd uses a job-costing system at its Melbourne plant. The plant has a Machining Department and an Assembly Department. Its job-costing system has two direct cost categories (direct materials and direct labour) and two manufacturing overhead cost pools (the Machining Department overhead, allocated to jobs based on machine hours, and the Assembly Department overhead, allocated to jobs based on direct labour hours). The 2015 budget for the plant is:
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Machining Department
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Assembly Department
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Manufacturing overhead
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$1,900,000
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53,000000
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Direct labour costs
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51,400,000
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$2,000,000
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Direct labour hours
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100,000
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200,000
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Machine hours
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50,000
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200,000
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Required
1. Calculate the budgeted manufacturing overhead rate for each department.
2. The following information relates to Job M1, which was started and completed during April:
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Machining Department
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Assembly Department
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Direct materials used
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545,000
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570,000
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Direct labour costs
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514,000
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515,000
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Direct labour hours
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1,000
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1,503
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Machine hours
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2,000
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1,000
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Calculate the total costs assigned to Job M1.
3. Prepare the journal entries to record the following:
a) Costs recorded for Job M1 during production
b) Completion of Job M1
c) Sale of Job M1 for $270,000
4. At the end of 2015, the actual manufacturing overhead costs were $2,100,000 in Machining and $3,700,000 in Assembly. Assume that 55,000 actual machine hours were used in the Machining Department and that actual direct labour hours in the Assembly Department were 260,000. Calculate the total amount of over-or under-applied manufacturing overhead of the plant and Prepare the journal entry to close the overhead account to Cost of goods sold.
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