Glavine Corporation manufactures precision equipment made to order for the semiconductor industry. Glavine uses two manufacturing overhead

Question:

Glavine Corporation manufactures precision equipment made to order for the semiconductor industry. Glavine uses two manufacturing overhead cost pools-one for the overhead costs incurred in its highly automated Machining Department and another for overhead costs incurred in its labour-based Assembly Department. Glavine uses a normal costing system. It allocates Machining Department overhead costs to jobs based on actual machinehours using a budgeted machine-hour overhead rate. It allocates Assembly Department overhead costs to jobs based on actual direct manufacturing labour-hours using a budgeted direct manufacturing labour-hour rate.

The following data are for the year 2016:

MachiningAssembly

Department Department

Budgeted overhead................................................$5,850,000...............$7,812,000

Budgeted machine-hours (MH)........................................90,000..........................0

Budgeted direct manufacturing labour-hours (DMLH)...................0..................124,000

Actual manufacturing overhead costs............................$5,470,000.............$8,234,000

Machine-hours and direct manufacturing labour-hours and the ending balances (before proration of under allocated overhead) are as follows:

Glavine Corporation manufactures precision equipment made to order for the

Required
1. Compute the budgeted overhead rates for the year in the Machining and Assembly Departments.
2. Compute the under allocated or over allocated overhead in each department for the year. Dispose of the under allocated or over allocated amount in each department using:
a. Immediate write-off to Cost of Goods Sold.
b. Proration based on ending balances (before proration) in Cost of Goods Sold, Finished Goods, and Work-in-Process.
c. Proration based on the allocated overhead amount (before proration) in the ending balances of Cost of Goods Sold, Finished Goods, and Work-in-Process.
3. Which disposition method do you prefer in requirement 2? Explain.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Cost Accounting A Managerial Emphasis

ISBN: 978-0133138443

7th Canadian Edition

Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham

Question Posted: