Oregon Outfitters, a manufacturer of fly fishing flies, uses a normal-costing system with a single overhead cost pool and direct labor cost as the cost-allocation base. The following data are for 2020:

Manufacturing overhead allocated data and the ending balances (before proration of under- or overallocated overhead) in each account are as follows:

Required

1. Compute the budgeted manufacturing overhead rate for 2020.

2. Compute the under- or overallocated manufacturing overhead of Oregon Outfitters in 2020. Adjust for this amount using the following:

a. Write-off 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 2020 (before proration) in the ending balances of Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold

3. Which method do you prefer in requirement 2? Explain.

Transcribed Image Text:

Budgeted manufacturing overhead costs Overhead allocation base Budgeted direct labor cost Actual manufacturing overhead costs incurred Actual direct labor cost $1,210,000 Direct Labor Cost $550,000 $1,200,500 $562,200