The Zaf Radiator Company uses a normal-costing system with a single manufacturing overhead cost pool and machine-hours
Question:
The Zaf Radiator Company uses a normal-costing system with a single manufacturing overhead cost pool and machine-hours as the cost-allocation base. The following data are for 2014:
Machine-hours data and the ending balances (before proration of under- or overallocated overhead) are as follows:
Required:
1. Compute the budgeted manufacturing overhead rate for 2014.
2. Compute the under- or overallocated manufacturing overhead of Zaf Radiator in 2014. Dispose of this amount using the following:
a. Writeoff to Cost of Goods Sold
b. Proration based on ending balances (before proration) in Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold
c. Proration based on the overhead allocated in 2014 (before proration) in the ending Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold
3. Which method do you prefer in requirement 2? Explain.
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan