Solar Radiator Company uses a normal-costing system with a single manufacturing overhead cost pool and machine-hours as the cost-allocation base. The following data are for

2012:

Budgeted manufacturing overhead costs

$4,875,000

Overhead allocation base

Machinehours

Budgeted machine-hours

75,000

Manufacturing overhead costs incurred

$5,125,000

Actual machine-hours

80,000

Machine-hours data and the ending balances (before proration of under- or overallocated overhead) are as follows

Actual Machine-Hours

2012 End-of-Year Balance

Cost of Goods Sold

60,000

$8,500,000

Finished Goods Control

12,000

1,000,000

Work-in-Process Control

8,000

500,000

Requirement 1. Compute the budgeted manufacturing overhead rate for

2012.

Begin by selecting the formula you will use. Then, enter the amounts and calculate the rate.

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Compute the budgeted manufacturing overhead rate for 2012

2.

Compute the under- or overallocated manufacturing overhead of

Solar Radiator in 2012

Dispose of this amount using the following:

a.

Write-off to Cost of Goods Sold

b.

Proration based on the overhead allocated in 2012

(before proration) in the ending balances of Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold

3.

Which method do you prefer in requirement 2? Explain.