Reference no: EM131829346

Problem - Destin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Destin allocates manufacturing overhead costs using direct manufacturing labor costs.

Destin provides the following information:

Budget Actual Results for 2009 for 2009

Direct material costs $2,000,000 $1,900,000

Direct manufacturing labor costs 1,500,000 1,450,000

Manufacturing overhead costs 2,700,000 2,755,000

a) Compute the actual and budgeted manufacturing overhead rates for 2009.

b) During March, the job-cost record for Job 722 contained the following information:

Direct materials used $40,000

Direct manufacturing labor costs $30,000

Compute the cost of Job 722 using (a) actual costing and (b) normal costing.

c) At the end of 2009, compute the under- or overallocated manufacturing overhead under normal costing. Why is there no under- or overallocated overhead under actual costing?