General ledger relationships, under- and overallocation. (S. Sridhar, adapted) Partially completed T-accounts and additional information for the Needham Company for the year 2007 are presented below. Needham uses a normal costing system.

Materials Control Work-in-Process Control Finished Goods Control 1-1-2007 480,000 456,000 1-1-2007 24,000 1-1-2007 12,000 1,080,000 36,000 Dir. manuf. 1,128,000 labour 432,000 Manufacturing Overhead Control Manufacturing Overhead Allocated 648,000 Cost of Goods Sold 150 Additional Information 1. Direct manufacturing labour wage rate was $18 per hour.

2. Manufacturing overhead is allocated at $24 per direct manufacturing labour hour.

3. During the year, sales revenues were $1,308,000, and marketing and distribution expenses were $168,000.

Required 1. What was the amount of direct materials issued to manufacturing during 2007?

2. What was the amount ofmanufacturing overhead allocated to jobs during 2007?

3. What was the cost ofjobs completed during 2007?

4. What was the balance in work-in-process inventory on December 31, 2007?

5. What was the cost ofgoods sold before any proration or under- or overallocated overhead?

6. What was the under- or overallocated manufacturing overhead in 2007?

7. Dispose ofthe under- or overallocated manufacturing overhead using

a. Immediate write-offto Cost of Goods Sold

b. Proration based on ending balances (before proration) in Work-in-Process, Finished Goods, and Cost of Goods Sold.

8. Using each of the disposition methods in requirement 7, calculate Needham’s operating income for the year 2007.

9. Which disposition method in requirement 7 do you recommend Needham use? Explain CHAPTER 4 your answer briefly.

COLLABORATIVE LEARNING PROBLEM