Job costing, accounting f or manufacturing overhead, budgeted rates.
Giannacopoulos SA uses a job-costing system at its Korinthos plant. The plant has a Machining Department and an Assembly Department. Its job-costing system has two
direct-cost categories (direct materials and direct manufacturing labour) and two manufac-
turing overhead cost pools (the Machining Department, allocated using actual machine-hours, and the Assembly Department, allocated using actual labour cost). The
2007 budget for the plant is as follows:
Machining Assembly
Department Department
| Manufacturing overhead | €1 800 000 | €3 600 000 |
| Direct manufacturing labour cost | €1 400 000 | €2 000 000 |
| Direct manufacturing labour-hours | €100 000 | €200 000 |
| Machine-hours | 50 000 | 200 000 |
Required
1 Present an overview diagram of Giannacopoulos’s job-costing system. What is the bud- geted overhead rate that should be used in the Machining Department? In the Assembly Department?
2 During the month of February, the cost record for Job 494 shows the following:
Machining Assembly
Department Department
| Direct material used | €45 000 | €70 000 |
| Direct manufacturing labour cost | €14 000 | €15 000 |
| Direct manufacturing labour-hours | 1 000 | 1 500 |
| Machine-hours | 2 000 | 1 000 |
What is the total manufacturing overhead allocated to Job 494?
| 3 Balances at the end of 2007 are as follows: | Machining | Assembly |
| Department | Department | |
| Manufacturing overhead incurred | €2 100 000 | €3 700 000 |
| Direct manufacturing labour cost | – | €2 200 000 |
| Machine-hours | 55 000 | – |
Calculate the under- or overallocated manufacturing overhead for each department
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