The RowOnWatershed 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 2017:

Budgeted manufacturing overhead cost	$132,000
Budgeted direct manufacturing labor cost	$220,000
Actual manufacturing overhead cost	$131,400
Actual direct manufacturing labor cost	$224,000

Inventory balances on December 31, 2017 were as follows:

2017 direct manufacturing

Account

Ending Balance

labor cost in ending balance

Work in process

$41,500

$15,680

Finished goods

232,400

62,720

Cost of goods sold

556,100

145,600

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 2017 in the ending balances (before proration) in each of the three accounts
4.	Which method would you choose? Justify your answer.