4-33 Disposition of overhead overallocation or underallocation, two indirect cost pools. {LO 2, 4, 5) Glavine Corporation manufactures precision equipment made to order for the semiconductor industry Glavine uses two manufacturing overhead cost poolsone 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 machine-hours 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: Machining Assembly Department Department Budgeted overhead $5,850,000 $7,812,000 Budgeted machine-hours (MH) 90,000 O 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 underallocated overhead) are as follows: Actual Direct Balance before Actual Machine- Manufacturing Proration, Hours Labour-Hours End of Year Cost of goods sold 69,000 83,200 $21,600,000 Finished goods 6,900 12,800 2,800,000 Work-in-process 16,100 32,000 7,600,000Required 1. Compute the budgeted overhead rates for the year in the Machining and Assembly departments. 2. Compute the under- or overallocated overhead in each department for the year. Dispose of the under- or overallocated 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