The Home 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 2017: Budgeted manufacturing overhead costs Overhead allocation base Budgeted machine-hours Manufacturing overhead costs incurred $ Cost of Goods Sold Finished Goods Control Work-in-Process Control $ 68,000 10,000 7,000 5,850,000 Machine-hours Actual machine-hours Machine-hours data and the ending balances (before proration of under- or overallocated overhead) are as follows: Actual Machine-Hours 2017 End-of-Year Balance $ 8,800,000 1,650,000 550,000 90,000 5,900,000 85,000 Requirement 1. Compute the budgeted manufacturing overhead rate for 2017. Begin by selecting the formula you will use. Then, enter the amounts and calculate the rate. Budgeted manufacturing overhead 5,850,000 Manufacturing overhead incurred 5,900,000 Requirement 2. Compute the under- or overallocated manufacturing overhead of Home Radiator in 2017. Begin by selecting the formula you will use. Next, enter the amounts in the formula and compute the under- or overallocated manufacturing overhead. (Use parentheses or a minus sign when entering overallocated amounts.) Cost of Goods Sold Finished Goods Control Work-in-Process Control Budgeted machine-hours $ 90,000 Budgeted manufacturing overhead rate 65 $ 375,000 a. Dispose of this amount using a write-off to Cost of Goods Sold. Show the account balances after the write-off. Account Balance After Proration 9.175.000 1,650,000 550.000 Manufacturing overhead Manufacturing overhead allocated = underallocated (overallocated) 5,525,000 b. Dispose of the amount using a proration based on ending balances (before proration) in Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold. Begin by selecting the formula to calculate the adjustment to each account. Then enter the amounts in the formula. (Enter the proportions as a decimal to three decimal places, "X.XXX". Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) Proportion (decimal) x (Over-) Underallocated OH Adjustment COGS FG WIP Now enter the account balances after the write-off. Account Balance After Proration Cost of Goods Sold Finished Goods Control Work-in-Process Control 0.800 X $ 0.150 x 0.050 x COGS FG WIP 9,100,000 1,706,250 568,750 X X 375,000 = 375,000 = 375,000 = c. Dispose of the amount using a proration based on the overhead allocated in 2017 (before proration) in the ending balances of Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold. Begin by selecting the formula to calculate the adjustment to each account. Then enter the amounts in the formula. (Enter the proportions as a decimal to three decimal places, "X.XXX". Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) Proportion (decimal) x (Over-) Underallocated OH X || $ II 300,000 56,250 18,750 Adjustment Now enter the account balances after the write-off. Account Balance After Proration Cost of Goods Sold Finished Goods Control Work-in-Process Control Requirement 3. Which method do you prefer in requirement 2? Explain. Alternative (3) is theoretically preferred over (4). finished goods, and cost of goods sold that would have been reported (5). This alternative yields the same ending balances in work in process,