Job costing, accounting for manufacturing overhead, budgeted rates. The Lynn Company uses a normal job-costing system at its Minneapolis 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 labor) and two manufacturing overhead cost pools (the machining department overhead, allocated to jobs based on actual machine-hours, and the assembly department overhead, allocated to jobs based on actual direct manufacturing labor costs). The 2014 budget for the plant is as follows: Machining Department Assembly Department Manufacturing overhead $1,800,000 $3,600,000 Direct manufacturing labor costs $1,400,000 $2,000,000 Direct manufacturing labor-hours 100,000 200,000 Machine-hours 50,000 200,000 Required: 1. Present an overview diagram of Lynn’s job-costing system. Compute the budgeted manufacturing overhead rate for each department. 2. During February, the job-cost record for Job 494 contained the following: Machining Department Assembly Department Direct materials used $45,000 $70,000 Direct manufacturing labor costs $14,000 $15,000 Direct manufacturing labor-hours 1,000 1,500 Machine-hours 2,000 1,000 Compute the total manufacturing overhead costs allocated to Job 494. 3. At the end of 2014, 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 machining and that actual direct manufacturing labor costs in assembly were $2,200,000. Compute the over- or underallocated manufacturing overhead for each department. SOLUTION 1. An overview of the product costing system is
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