The Finer Furniture Company produces expensive desks for executives. The wood for the desks are cut into standard sizes and desks are assembled in the Construction and Assembly (C&A) department. The assembled desks are then sent to the Finishing department to be stained. Company uses departmental overhead rates with overhead costs in the C&A department allocated to production using machine hours, and overhead costs in the Finishing department allocated using direct labor-hours. There were no WIP and FG inventories at the beginning of the year. Company uses a normal costing system and has the following data for 2008: C&A Finishing Budgeted overhead rate $ 40 per MH $ 50 per DLH Actual overhead cost $ 163 000 $ 87 000 Actual hours 4000 MHS 2000 DLHs Ending balances (ending balances include OH cost applied during the 2008 but are not adjusted for any under- overapplied OH), machine hours and direct labor-hours data are as follows: Balance before adjustment for under-lover-applied Account OH, Dec.31 2008 Actual MHs Actual DLHs Work in process $ 150 000 200 100 Finished goods $ 250 000 600 400 Cost of goods sold $ 1600 000 3200 1500 Required: 1. Calculate the over- or underapplied OH for each of the C&A and Finishing departments, and total for the company, in 2008. 2. Calculate the ending balances in WIP, FG, and COGS if the under- or overapplied OH amounts in each department are: a. Written off to COGS b. Allocated between WIP, FG, and COGS 3. Describe, which method should be chosen if resulting under- or overapplied OH cost is material. 4. Calculate prime costs in the ending balances (before adjustment) of WIP, FG, and COGS. The Finer Furniture Company produces expensive desks for executives. The wood for the desks are cut into standard sizes and desks are assembled in the Construction and Assembly (C&A) department. The assembled desks are then sent to the Finishing department to be stained. Company uses departmental overhead rates with overhead costs in the C&A department allocated to production using machine hours, and overhead costs in the Finishing department allocated using direct labor-hours. There were no WIP and FG inventories at the beginning of the year. Company uses a normal costing system and has the following data for 2008: C&A Finishing Budgeted overhead rate $ 40 per MH $ 50 per DLH Actual overhead cost $ 163 000 $ 87 000 Actual hours 4000 MHS 2000 DLHs Ending balances (ending balances include OH cost applied during the 2008 but are not adjusted for any under- overapplied OH), machine hours and direct labor-hours data are as follows: Balance before adjustment for under-lover-applied Account OH, Dec.31 2008 Actual MHs Actual DLHs Work in process $ 150 000 200 100 Finished goods $ 250 000 600 400 Cost of goods sold $ 1600 000 3200 1500 Required: 1. Calculate the over- or underapplied OH for each of the C&A and Finishing departments, and total for the company, in 2008. 2. Calculate the ending balances in WIP, FG, and COGS if the under- or overapplied OH amounts in each department are: a. Written off to COGS b. Allocated between WIP, FG, and COGS 3. Describe, which method should be chosen if resulting under- or overapplied OH cost is material. 4. Calculate prime costs in the ending balances (before adjustment) of WIP, FG, and COGS