Requirement 1. Compute the budgeted overhead rates for the year in the Machining and Assembly Departments. (Round your answers to the nearest wholedollar.)The budgeted overhead rate for the year in the Machining Department is $6060.The budgeted overhead rate for the year in the Assembly Department is $5656.Requirement 2. Compute the underallocated or overallocated overhead in each department for the year. Dispose of the underallocated or overallocated amount in each departmentusing:a. immediatewrite-off to Cost of GoodsSold,b. proration based on ending balances(before proration) in Cost of GoodsSold, FinishedGoods, andWork-in-Process,c. proration based on the allocated overhead amount(before proration) in the ending balances of Cost of GoodsSold, FinishedGoods, andWork-in-Process.We will begin with a. immediatewrite-off to Cost of Goods Sold.The first step is to find the overallocated or underallocated amounts for each department. Begin by selecting theformula, then enter the amounts for the Machining Department. (Indicate an overallocated amount using a minussign.)

	Actual manufacturing overhead costs	-	Manufacturing overhead allocated	=	Over- or Under-Allocation
4,850,000	?	5,682,000	=

Using the formula you determinedabove, compute theoverallocated/underallocated amount for the Assembly Department.

7,024,000

?

6,658,400

=

Now, dispose of this amount using awrite-off to Cost of Goods Sold for the Machining Department. Show the account balances after thewrite-off.(Use a minus sign or parenthesis for any subtractions. Enter a zero"0" for any zero adjustments orbalances.)

Account Balance				Account Balance
	Before Proration	+	Adjustment	=	After Proration
Cost of Goods Sold	$21,500,000	+	=
Finished Goods Control	2,300,000	+		=
Work-in-Process Control	7,400,000	+		=

b. Compute the underallocated or overallocated overhead in each department for the year. Dispose of the underallocated or overallocated amount in each department using proration based on ending balances(before proration) in Cost of GoodsSold, FinishedGoods, andWork-in-Process.(When calculating theprorations, round the interim proration ratio to eight decimal places. Use a minus sign or parenthesis for anysubtractions.)

	Account		Proration of		Proration of		Account
	Balance		Underallocation or		Underallocation or		Balance
Overallocation	Overallocation	(after proration)
Overhead	Overhead
			Machining Dept.		Assembly Dept.
WIP	7,400,000
FG	2,300,000
COGS	21,500,000
Total

c. Compute the underallocated or overallocated overhead in each department for the year. Dispose of the underallocated or overallocated amount in each department using proration based on the allocated overhead amount(before proration) in the ending balances of Cost of GoodsSold, FinishedGoods, andWork-in-Process.Start with the Machining Department. (Round the proportion to eight decimalplaces.)

Proration of
	Allocated				Underallocated or
Overhead	Overallocated
	Before Proration	x	Proportion	=	Overhead
WIP		x		=	$(137,935)
FG		x		=	(96,642)
COGS		x		=	(597,423)
Total

Now, complete for the Assembly Department. (Round the proportion to eight decimalplaces.)

Proration of
	Allocated				Underallocated or
Overhead	Overallocated
	Before Proration	x	Proportion	=	Overhead
WIP		x		=	$81,484
FG		x		=	36,898
COGS		x		=	247,218
Total

Requirement 3. Which method do you prefer in Requirement2? Explain.Alternative ?(a)(b)(c)is theoretically preferred over ?(a) and (b)(a) and (c)(b) and (c). This alternative yields the same ending balances in Work inProcess, FinishedGoods, and Cost of Goods Sold that would have been reported ?had actual indirect cost rates been used.had budgeted indirect cost rates been used.had the over- understatement doccurred in only the goods sold.

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