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Head Page Break Problem 1 (25 marks): Adventure Designs makes custom backyard play structures that it sells to dealers across the Midwest. The play structures
Head Page Break Problem 1 (25 marks): Adventure Designs makes custom backyard play structures that it sells to dealers across the Midwest. The play structures are produced in two departments, fabrication (a mostly automated department) and custom finishing (a mostly manual department). The company uses a normal-costing system in which overhead in the fabrication department is allocated to jobs on the basis of machine-hours and overhead in the finishing department is allocated to jobs based on direct manufacturing labour-hours. During May, Adventure Designs reported actual overhead of $42,600 in the fabrication department and $39,800 in the finishing department. Additional information follows: Manufacturing overhead rate (fabrication department) $12 per machine-hour Manufacturing overhead rate (finishing department) $20 per direct manuf, labour-hour Machine-hours (fabrication department) for May 3,200 machine-hours Direct manuf. labour-hours (finishing department) for May 1,800 labour-hours Work-in-process inventory, May 31 $60,000 Finished-goods inventory, May 31 $180,000 Cost of goods sold, May $360,000 1. Adventure Designs prorates under and overallocated overhead monthly to work in process, finished goods, and cost of goods sold based on the ending balance in each account. Required 1. Calculate the amount of overhead allocated in the fabrication department and the finishing department in May. 2. Calculate the amount of under-or overallocated overhead in each department and in total. 3. How much of the under-or overallocated overhead will be prorated to (a) work-in-process inventory, (b) finished-goods inventory, and (c) cost of goods sold based on the ending balance (before proration) in each of the three accounts? What will be the balance in work-in- process, finished-goods, and cost of goods sold after proration
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