Heat Corporation manufactures precision equipment made to order for the

semiconductor industry. Heat uses two manufacturing overhead cost

pools

$-$

$$one for the overhead costs incurred in its highly automated

Machining Department and another for overhead costs incurred in its labor

$-$

based Assembly Department. Heat 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 labor hours using a budgeted direct manufacturing labor

$-$

hour rate. The following data are for the year:

Requirement

$1$

$.$

$$Compute the budgeted overhead rates for the year in the

Machining and Assembly Departments.

$($

Round your answers to the nearest whole

dollar.

$)$

The budgeted overhead rate for the year in the Machining Department is

$

The budgeted overhead rate for the year in the Assembly Department is

Heat Corporation manufactures precision equipment made to order for the

semiconductor industry. Heat uses two manufacturing overhead cost

pools$-$ one for the overhead costs incurred in its highly automated

Machining Department and another for overhead costs incurred in its labor$-$

based Assembly Department. Heat 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 labor hours using a budgeted direct manufacturing labor$-$

hour rate. The following data are for the year:

Requirement $1.$ Compute the budgeted overhead rates for the year in the

Machining and Assembly Departments. $($Round your answers to the nearest whole

dollar.$)$

The budgeted overhead rate for the year in the Machining Department is

$

The budgeted overhead rate for the year in the Assembly Department is

$$

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 is preferred in requirement$2?$ Explain.