The Dougherty Furniture Company manufactures tables. In March, the two production departments had budgeted allocation bases of 4,000 machine-hours in Department 100 and 8,000 direct manufacturing labor-hours in Department 200. The budgeted manufacturing overheads for the month were $57,500 and $62,500, respectively. For Job A, the actual costs incurred in the two departments were as follows:Department 100Department 200Direct materials purchased on account$110,000$177,500Direct materials used32,50013,500Direct manufacturing labor52,50053,500Indirect manufacturing labor11,0009,000Indirect materials used7,5004,750Lease on equipment16,2503,750Utilities1,0001,250Job A incurred 800 machine-hours in Department 100 and 300 manufacturing labor-hours in Department 200. 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 100.c.What is the total cost of Job Ad.What are the major cost objects that managers focus on in organizations.Question 4 (5 marks)The Alex Miller Corporation operates one central plant that has two divisions, the Flashlight Division and the Night Light Division. The following data apply to the coming budget year:Budgeted costs of the operating the plantfor 10,000 to 20,000 hours:Fixed operating costs per year$240,000Variable operating costs$10per hourPractical capacity20,000hours per yearBudgeted long-run usage per year:Lamp Division800 hours × 12 months =9,600hours per yearFlashlight Division450 hours × 12 months =5,400hours per year Assume that practical capacity is used to calculate the allocation rates. Further assume that actual usage of the Lamp Division was 700 hours and the Flashlight Division was 400 hours for the month of June. Required:a.If a single-rate cost-allocation method is used, what amount of operating costs will be budgeted for the Lamp Division each month? For the Flashlight Division each month? b.For the month of June, if a single-rate cost-allocation method is used, what amount of cost will be allocated to the Lamp Division? To the Flashlight Division? Assume actual usage is used to allocate operating costs. c.If a dual-rate cost-allocation method is used, what amount of operating costs will be budgeted for the Lamp Division each month? For the Flashlight Division each month? d.For the month of June, if a dual-rate cost-allocation method is used, what amount of cost will be allocated to the Lamp Division? To the Flashlight Division? Assume budgeted usage is used to allocate fixed operating costs and actual usage is used to allocate variable operating costs.e.Explain which method is the most practical?
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