Proration of overhead. The Ride-On-Water (ROW) Company produces a line of non- oo motorized boats. ROW uses a normal job costing system and allocates manufacturing overhead — {59% odfir ect manufacturing costs using direct manufacturing labour cost. The following data are available for 2009:

REQUIRED 1. Calculate the budgeted manufacturing overhead rate.
2. Calculate the amount of underallocated or overallocated manufacturing overhead.
3. Calculate the ending balances in work-in-process, finished goods, and cost of goods sold if underallocated or overallocated overhead is:

a. Written off to cost of goods sold

b. Prorated based on ending balances (before proration) in each of the three accounts

c. Prorated based on the overhead allocated in 2009 in the ending balances, before proration, in each of the three accounts. job Couenacee 4. Which disposition method do you prefer in requirement 3? Explain.LO1

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Budgeted manufacturing overhead costs Budgeted direct manufacturing labour cost Actual manufacturing overhead costs Actual direct manufacturing labour cost Inventory balances on December 31, 2009 were: Account Work-in-process Finished goods Cost of goods sold Ending Balance $ 50,000 $240,000 $560,000 $100,000 $200,000 $106,000 $220,000 2009 Direct Manufacturing Labour Cost in Ending Balance $ 20,000 $ 60,000 $140,000