The RideOnWave Company (ROW) produces a line of non-motorized boats. ROW uses a normal-costing system and allocates manufacturing overhead using direct manufacturing labor cost. The following data are for 2020:
The Ride-On-Wave Company (ROW) produces a line of non-motorized boats. ROW uses a normal-costing system and allocates manufacturing overhead using direct manufacturing labor cost. The following data are for 2020: E: (Click the icon to view the data.) Inventory balances on December 31, 2020 were as follows: Click the icon to view the account balances.) Read the requirements. Requirement 1. Calculate the manufacturing overhead allocation rate. Identify the formula and calculate the manufacturing overhead allocation rate. (Enter the result as a whole number.) = Overhead allocation rate = Requirement 2. Compute the amount of under-or overallocated manufacturing overhead. Identify the formula and calculate the under- or manufacturing overallocated overhead. (Use parentheses or a minus sign to report overhead overallocated.) = Underallocated (overallocated) Requirement 3. Calculate the ending balances in work in process, finished goods and cost of goods sold if under-or overallocated manufacturing overhead is as follows: (a) written off to cost of goods sold, (b) prorated based on ending balances (before proration) in each of the three accounts, (c) prorated based on the overhead allocated in 2020 in the ending balances (before proration) in each of the three accounts. (a.) Calculate the ending balances in work in process, finished goods and cost of goods sold if under-or overallocated manufacturing overhead is written off to cost of goods sold. Account Ending Balance Work in process Finished goods Cost of goods sold (b.) Begin by identifying the formula and calculating the adjustment to each account assuming under-or overallocated manufacturing overhead is prorated based on ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) (b.) Adjustment WIP X x FG CGS Now calculate the ending balances in work in process, finished goods and cost of goods sold if under- or overallocated manufacturing overhead is prorated based on ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show adjustments to be subtracted.) (b.) Ending Balance (adjusted) WIP + + FG + CGS + (c.) Begin by identifying the formula and calculating the adjustment to each account assuming under-or overallocated manufacturing overhead is prorated based on the overhead allocated in 2020 in the ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted) (c.) Adjustment WIP x = FG = CGS = (c.) Enter the formula and calculate the ending balances in work in process, finished goods and cost of goods sold if under-or overallocated manufacturing overhead is prorated based on the overhead allocated in 2020 in the ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) (c.) Ending Balance (adjusted) WIP + = FG + = CGS = Requirement 4. Which method would you choose? Justify your answer. The method that makes the most sense is to The amount of the over- underallocation amount is so Data Table $ $ Budgeted manufacturing overhead cost Budgeted direct manufacturing labor cost Actual manufacturing overhead cost Actual direct manufacturing labor cost 121,000 220,000 121,950 229,000 S $ Print Done - X Data Table Account Work in process Finished goods Cost of goods sold Ending balance $ 50,700 $ 245,050 549,250 2020 direct manufacturing labor cost in ending balance 18,320 64,120 146,560 Print Done Requirements 1. Calculate the manufacturing overhead allocation rate. 2. Compute the amount of under- or overallocated manufacturing overhead. 3. Calculate the ending balances in work in process, finished goods, and cost of goods sold if under-or overallocated manufacturing overhead is as follows: a. Written off to cost of goods sold b. Prorated based on ending balances (before proration) in each of the three accounts c. Prorated based on the overhead allocated in 2020 in the ending balances (before proration) in each of the three accounts 4. Which method would you choose? Justify your answer. Print Done
