The RowOnWave 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:

Budgeted manufacturing overhead cost

$125,000

Budgeted direct manufacturing labor cost

$250,000

Actual manufacturing overhead cost

$115,000

Actual direct manufacturing labor cost

$220,000

		2020 direct manufacturing
Account	Ending balance	labor cost in ending balance
Work in process	$33,400	$19,800
Finished goods	225,450	59,400
Cost of goods sold	576,150	140,800

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 in the ending balances (before proration) in each of the three accounts

4. Which method would you choose? Justify your answer.