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The Wamth 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
The Wamth 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 2017: (Click the icon to view the following data.) Read the requirements. i Data Table X Requirements Budgeted manufacturing overhead costs $ 4,900,000 Overhead allocation base Machine-hours Budgeted machine-hours 70,000 Manufacturing overhead costs incurred $ 5,100,000 Actual machine-hours 65,000 Machine-hours data and the ending balances (before proration of under-or overallocated overhead) are as follows: 1. Compute the budgeted manufacturing overhead rate for 2017 2. Compute the under-or overallocated manufacturing overhead of Wamth Radiator in 2017. Dispose of this amount using the following: a. Write-off to Cost of Goods Sold b. Proration based on ending balances (before proration) in Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold c. Proration based on the overhead allocated in 2017 (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. Cost of Goods Sold Finished Goods Control Work-in-Process Control Actual Machine-Hours 48,000 10,000 7,000 2017 End-of-Year Balance 7,500,000 1,500,000 1,000,000 Print Done Print Done The Zef 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 2017: (Click the icon to view the following data.) Read the requirements. Requirement 1. Compute the budgeted manufacturing overhead rate for 2017 Begin by selecting the formula you will use. Then, enter the amounts and calculate the rate. Budgeted manufacturing overhead Budgeted manufacturing overhead rate Budgeted machine-hours Requirement 2. Compute the under-or overallocated manufacturing overhead of Zef Radiator in 2017. Begin by selecting the formula you will use. Next, enter the amounts in the formula and compute the under-or overallocated manufacturing overhead. (Use parentheses or a minus sign when entering overallocated amounts.) Manufacturing overhead incurred Manufacturing overhead underallocated (overallocated) - Manufacturing overhead allocated = a. Dispose of this amount using a write-off to Cost of Goods Sold. Show the account balances after the write-off. Account Balance After Proration Cost of Goods Sold Finished Goods Control Work-in-Process Control b. Dispose of the amount using a proration based on ending balances (before proration) in Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold. Begin by selecting the formula to calculate the adjustment to each account. Then enter the amounts in the formula. (Enter the proportions as a decimal to three decimal places, "X.XXX". Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) Proportion (decimal) X (Over-) Underallocated OH = = Adjustment $ COGS FG WIP Now enter the account balances after the write-off. Account Balance After Proration Cost of Goods Sold Finished Goods Control Work-in-Process Control c. Dispose of the amount using a proration based on the overhead allocated in 2017 (before proration) in the ending balances of Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold. Begin by selecting the formula to calculate the adjustment to each account. Then enter the amounts in the formula. (Enter the proportions as a decimal to three decimal places, "X.XXX". Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) Proportion (decimal) x (Over-) Underallocated OH = Adjustment COGS FG $ WIP Now enter the account balances after the write-off. Account Balance After Proration Cost of Goods Sold Finished Goods Control Work-in-Process Control Requirement 3. Which method do you prefer in requirement 2? Explain. Alternative is theoretically preferred over This alternative yields the same ending balances in work in process, finished goods, and cost of goods sold that would have been reported
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