Machine Dept Finishing Dept

1 Indirect Cost Pool MOH MOH

Machine hour in Direct labor cost

Cost Allocation Base Machine dept in Finishing dept

Indirect Cost
Cost
Direct Cost

Direct Cost Direct Material Direct Labor

Machine Dept Finishing Dept

2 Budgeted MOH cost $ 10,660,000 $ 8,000,000
Budgeted DL Cost $ 4,000,000
Budgeted Machine hour 205,000

Machine Dept Finishing Dept

Budgeted MOH rate $ 52 2

3 Actual allocation base Machine Dept Finishing Dept

Machine hour 150
DL cost $ 1,300

MOH allocated for Job 431

Machine Dept $ 7,800
Finishing Dept $ 2,600
Total $ 10,400

4 Machine Dept Finishing Dept Total

DM $ 16,150 $ 3,000 $ 19,150
DL $ 350 $ 1,300 $ 1,650
MOH allocated $ 7,800 $ 2,600 $ 10,400
Total Manufacturing Cost Job 431 $ 31,200

Total unit 400

Cost/unit $ 78

5 Machine Dept Finishing Dept

Actual MOH incured $ 13,250,000 $ 8,400,000
Budgeted MOH $ 13,000,000 $ 8,600,000
Under(over)allocated $ 250,000 $ (200,000)
 Total under(over)allocated $ 50,000

6 A cost pool is used if all the cost have same or similar cause-effect relationship with the cost allocation base
Solomon might think that its MOH cost are not homogenous. Those in Machine department have more related cau
those in Finishing department have more related cause-effect with direct labor cost
Solomon assumes that it will more beneficial to use 2 cost pools to make accurate product cost
Budgeted MOH rate : Budg. MOH cost
Budg. Allocation base

MOH allocated : Budg.MOH rate*Actual allocation base incured

Actual machine hour 250,000

Actual DL Cost $ 4,300,000
ip with the cost allocation base
ine department have more related cause-effect with machine hour

urate product cost

 Account Actual machine hour Ending balance 2017
Work in Process 4000 $ 750,000
Finished Good 11000 $ 1,250,000
COGS 60000 $ 8,000,000

1 Budgeted MOH cost $ 4,800,000

Budgeted Machine hour $ 80,000
Budgeted MOH rate $ 60

2 Budgeted MOH rate $ 60

Actual Machine hour used 75000
Budgeted MOH cost allocated $ 4,500,000
Actual MOH cost incurred $ 4,900,000
Under(over)allocated $ 400,000

2.a Account End 2017 balance Write off

underallocated MOH
Work in Process $ 750,000 0
Finished Goods $ 1,250,000 0
COGS $ 8,000,000 $ 400,000
Total $ 10,000,000 $ 400,000
*Write off to COGS

2.b Proration based on Ending balance in 2017 (before proration)

Account End 2017 balance (1) Persentase (2)

Work in Process $ 750,000 0.075

Finished Goods $ 1,250,000 0.125
COGS $ 8,000,000 0.8
Total $ 10,000,000 1

2.c Proration based on MOH allocated to Ending balance 2017 (before proration)

Account End 2017 balance (1)

MOH allocated in each
account balance** (2)
Work in Process $ 750,000 $ 240,000
Finished Goods $ 1,250,000 $ 660,000
 COGS $ 8,000,000 $ 3,600,000
Total $ 10,000,000 $ 4,500,000

** Actual allocation base

Account Budgeted MOH rate incurred
WIP $ 60 4000
FG $ 60 11000
COGS $ 60 60000
allocation base

End 2017
balance after
write off
$ 750,000 MOH Allocated $ 10,000,000
$ 1,250,000 COGS $ 400,000
$ 8,400,000 MOH Control $ 10,400,000
$ 10,400,000

End 2017
Proration of balance after
underallocated proration (1)+(3)
MOH* (3)
$ 30,000 $ 780,000 *Persentase x Under(0ver)allocated MOH
$ 50,000 $ 1,300,000
$ 320,000 $ 8,320,000
$ 400,000 $ 10,400,000

End 2017
balance after
Persentase (3) Proration of proration (1) +
underallocated (4)
MOH* (4)
0.053 $ 21,333.33 $ 771,333.33 *Persentase x Under(over)allocated MOH
0.147 $ 58,666.67 $ 1,308,666.67
 0.8 $ 320,000 $ 8,320,000
1 $ 400,000 $ 10,400,000

MOH allocated in
each account
$ 240,000
$ 660,000
$ 3,600,000
cated MOH
1 Material control 800 mencatat pembelian DM
AP control 800
mencatat penggunaan DM
2 WIP control 710
Material control 710
mecatat penggunaan indirect m
3 MOH control 100
Material control 100

4 WIP control 1300 mencatat penggunaan DL

MOH control 900 mencatat penggunaan indirect
Wage payable control 2200 ini akun pendukung, kira-kira di

5 MOH control 400 mencatat depresiasi

Acc.Depreciation building&equipment 400

6 MOH control 550 mencatat miscellaneous MOH

Miscellaneous account 550 ini akun pendukung yang kira-k

7 WIP control 2080

MOH allocated 2080 mengalokasikan MOH ke WIP

8 FG control 4120
WIP control 4120 mencatat WIP yang udah jadi F

9 AR/Cash control 8000

Revenue 8000 mencatat revenue

10 COGS 4020
FG control 4020 mencatat FG yang terjual menja

11 MOH allocated 2080

MOH control 1950
COGS 130 writeoff MOH overallocated MO
mencatat pembelian DM

mencatat penggunaan DM

mecatat penggunaan indirect material

mencatat penggunaan DL
mencatat penggunaan indirect labor
ini akun pendukung, kira-kira dibayarnya masih kredit

mencatat depresiasi

mencatat miscellaneous MOH

ini akun pendukung yang kira-kira dipakai

mengalokasikan MOH ke WIP

mencatat WIP yang udah jadi FG (COGM)

mencatat revenue

mencatat FG yang terjual menjadi COGS

writeoff MOH overallocated MOH ke COGS