The pisano company_job costing, accounting for manufacturing



Job costing, accounting for manufacturing overhead, budgeted rates.

The Pisano Company uses a job-costing system at its Dover, Delaware, plant. Pisano uses normal costing with two direct-cost categories (direct materials and direct manufacturing labor) and two manufacturing overhead cost pools (the machining department with machine-hours as the allocation base and the finished department with direct manufacturing labor costs as the allocation base). The 2014 budget for the plant is as follows:



Machining Department

Finishing Department

Manufacturing overhead costs



Direct Manufacturing labor costs



Direct manufacturing labor hours



Machine hours





1.     Prepare an overview diagram of Pisano’s job-costing system.

2.     What is the budgeted manufacturing overhead rate in the machining department? In the finishing department?

3.     During the month of January, the job-cost record for job 431  shows the following:



Machining Department

Finishing Department

Direct materials used



Direct manufacturing labor costs



Direct manufacturing labor hours



Machine hours




Compute the total manufacturing overhead cost allocated to job 431.

4.     Assuming that job 431 consisted of 300 units of product, what is the cost per unit?

5.     Amounts at the end of 2014 are as follows:



Machining Department

Finishing Department

Manufacturing overhead incurred



Direct manufacturing labor costs



Machine hours




Compute the under or overallocated manufacturing overhead for each department and for the Dover plant as a whole.



6.     Why might Pisano use two different manufacturing overhead cost pools in its job-costing system? 

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