% E4-35 (similar to) Question Help The Row - On-Wave Company (ROW) produces a line of non-motorized boats. ROW uses a normal-costing system and allocates manufacturing overhead using direct manufacturing labor cost. The following data are for 2017: (Click the icon to view the data.) Inventory balances on December 31, 2017 were as follows: (Click the icon to view the account balances.) Read the requirements. - Data Table - X | A Data Table i Requirements Account Ending Balance $ 41,500 $ 232,400 2017 direct manufacturing labor cost in ending balance 18,320 64,120 146,560 Budgeted manufacturing overhead cost Budgeted direct manufacturing labor cost Actual manufacturing overhead cost Actual direct manufacturing labor cost Work in process Finished goods Cost of goods sold 135,000 225,000 140,400 229,000 1. Calculate the manufacturing overhead allocation rate. Compute the amount of under-or overallocated manufacturing overhead. 3. Calculate the ending balances in work in process, finished goods, and cost o goods sold if under-or overallocated manufacturing overhead is as follows: 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 2017 in the ending balances (before proration) in each of the three accounts 4. Which method would you choose? Justify your answer. 556,100 Print Done Print Done Print Done Requirement 1. Calculate the manufacturing overhead allocation rate. Identify the formula and calculate the manufacturing overhead allocation rate. (Enter the result as a whole number.) Budgeted manufacturing overhead I Budgeted cost allocation base = Overhead allocation rate % of DL costs Requirement 2. Compute the amount of under-or overallocated manufacturing overhead. Identify the formula and calculate the under-or manufacturing overallocated overhead. (Use parentheses or a minus sign to report overhead overallocated.) Actual manufacturing overhead - Allocated manufacturing overhead Underallocated (overallocated) = $ Requirement 3. Calculate the ending balances in work in process, finished goods and cost of goods sold if under-or overallocated manufacturing overhead is as follows: (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 2017 in the ending balances (before proration) in each of the three accounts. (a.) Calculate the ending balances in work in process, finished goods and cost of goods sold if under-or overallocated manufacturing overhead is written off to cost of goods sold. Ending Balance Account Work in process Finished goods Cost of goods sold $ $ (b.) Begin by identifying the formula and calculating the adjustment to each account assuming under-or overallocated manufacturing overhead is prorated based on ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) (b.) Proportion (decimal) (Over-) Underallocated Overhead = Adjustment WIP FG 69 CGS 7 + Now calculate the ending balances in work in process, finished goods and cost of goods sold if under-or overallocated manufacturing overhead is prorated based on ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show adjustments to be subtracted.) (6.) Ending Balance (original) Adjustment = Ending Balance (adjusted) WIP $ FG CGS = + $ + (c.) Begin by identifying the formula and calculating the adjustment to each account assuming under-or overallocated manufacturing overhead is prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) ELEVENE FEE Proportion (decimal) x (Over-) Underallocated Overhead = Adjustment WIP = $ FG = $ CGS (c.) Enter the formula and calculate the ending balances in work in process, finished goods and cost of goods sold if under-or overallocated manufacturing overhead is prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) (c.) Ending Balance (original) Adjustment = Ending Balance (adjusted) WIP FG CGS + + + 69 + Requirement 4. Which method would you choose? Justify your answer. . The amount of the over- underallocation amount is immaterial The method that makes the most sense is to write off the adjustment to cost of goods sold (method a.) the simplest method is acceptable This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers