Question
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
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.
Choose from any list or enter any number in the input fields and then continue to the next question.
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