PROBLEM 3-1A______
The Lynn Company uses a job-costing system at its London 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 manufacturing overhead cost pools (the Machining Department, allocated using actual machine-hours, and the Assembly Department, allocated using actual direct manufacturing labour cost). The 2001 budget for the plant is as follows:
MachiningAssembly
DepartmentDepartment
Manufacturing overhead£1,800,000£3,600,000
Direct manufacturing labour cost1,400,0002,000,000
Direct manufacturing labour-hours100,000200,000
Machine-hours50,000200,000
The company uses a budgeted overhead rate for allocating overhead to production orders on a machine-hour basis in Machining and on a direct manufacturing labour-cost basis in Assembly.
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 cost record for Job 494 contained the following:
MachiningAssembly
DepartmentDepartment
Direct materials used£45,000£70,000
Direct manufacturing labour cost£14,000£15,000
Direct manufacturing labour-hours1,0001,500
Machine-hours2,0001,000
Compute the total manufacturing overhead costs of Job 494.
3.At the end of 2001, 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 labour costs in Assembly was £2,200,000. Compute the over-allocated or under-allocated manufacturing overhead for each department.
PROBLEM 3-1A
Continued
Instructions:
1.Review the printed template called Problem 4-18 that follows these instructions. Most of the problem data have been entered for you in the data input section of the spreadsheet.
2.There are 6 FORMULAS in the template that you need to provide to complete your analysis. Using the spaces provided below, write the formulas where requested in the template.
FORMULA1______FORMULA4______
FORMULA2______FORMULA5______
FORMULA3______FORMULA6______
3.Click the Lotus or Excel icon from the program manager screen to start the spreadsheet program. Click on the Open File SmartIcon/Button to retrieve the template for the problem. Then enter the 6 FORMULAS where indicated on the template.
4.Click the Save File SmartIcon/Button to save your work.
- Click the Print Smarticon to display the Print dialog box. Click the OK button to print your work.
For Excel users, click the Print Button to print your work.