Marblex manufactures marble statues. In March, the two production departments had budgeted allocation bases of 4,000 machine-hours in Department X and 8,000 direct
manufacturing labor-hours in Department Y. The budgeted manufacturing overheads for the month were $60,000 and $64,000, respectively. For Job A, the actual costs incurred in the two departments were as follows:
Department X Department Y
Direct materials purchased on account $110,000 $177,500
Direct materials used 40,000 13,500
Direct manufacturing labor 55,000 53,500
Indirect manufacturing labor 11,000 9,000
Indirect materials used 5,000 4,750
Lease on equipment 16,250 3,750
Utilities 1,000 1,250
Job A incurred 800 machine-hours in Department X and 300 manufacturing labor-hours in Department Y. The company uses a budgeted overhead rate for applying overhead to production.
Required:
a. Determine the budgeted manufacturing overhead rate for each department.
b. Prepare the necessary journal entries to summarize the March transactions for Department X.
c. What is the total cost of Job A?
Answer:
a. Manufacturing overhead rate Department X = $60,000/4,000 hours
= $15 per machine-hour
Manufacturing overhead rate Department Y = $64,000/8,000 hours
= $8 per labor-hour
b. Materials Control Department X 110,000
Accounts Payable Control 110,000
Work-in-Process Control Department X 40,000
Manufacturing Overhead Control Department X 5,000
Materials Control Department X 45,000
Work-in-Process Control Department X 55,000
Manufacturing Overhead Control Department X 11,000
Wages Payable Control 66,000
Manufacturing Overhead Control Department X 17,250
Leaseholds Payable Control 16,250
Utilities Payable Control 1,000
Work-in-Process Control Department X* 12,000
Manufacturing Overhead Allocated 12,000
*($15 × 800 hrs)
c. Job A:
Direct materials Dept. X $ 40,000
Direct materials Dept. Y 13,500
Direct manufacturing labor Dept. X 55,000
Direct manufacturing labor Dept. Y 53,500
Manufacturing overhead Dept. X ($15 × 800) 12,000
Manufacturing overhead Dept. Y ($8 × 300) 2,400
Total $176,400
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