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Destin Products uses a job-costing system with two direct cost categories (direct materials and direct manufacturing labour) and one manufacturing overhead cost pool. Destin allocates manufacturing overhead costs using direct manufacturing labour costs. Destin provides the following information:
Budget for Year 2015Actuals for Year 2015
Direct manufacturing labour costs..........$2,600,000.......................$2,540,000
Direct manufacturing overhead costs........2,210,000........................2,311,400
Direct materials costs...........................1,800,000........................1,740,000
Required
1. Compute the actual and budgeted manufacturing overhead rates for 2015.
2. During March, the cost record for Job 626 contained the following:
Direct materials used........................$48,000
Direct manufacturing labour costs...........27,000
Compute the cost of Job 626 using (a) an actual costing system and (b) a normal costing system.
3. At the end of 2015, compute the under allocated or over allocated manufacturing overhead under Destin's normal costing system. Why is there no under allocated or over allocated overhead under Destin's actual costing system?
4. Comment briefly on the advantages and disadvantages of actual costing systems and normal costing systems.
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