Trusty Designs makes custom backyard play structures that it sells to dealers across the Midwest. The play structures are produced in two departments, fabrication (a mostly automated department) and custom finishing (a mostly manual department). The company uses a normal-costing system in which overhead in the fabrication department is allocated to jobs on the basis of machine-hours and overhead in the finishing department is allocated to jobs based on direct manufacturing labor-hours. During May, Trusty Designs reported actual overhead of $31,100 in the fabrication department and $30,600 in the finishing department. Additional information follows: (Click the icon to view the data.) Trusty Designs prorates under- and overallocated overhead monthly to work in process, finished goods, and cost of goods sold based on the ending balance in each account. Read the requirements. Requirement 1. Calculate the amount of overhead allocated in the fabrication department and the finishing department in May. Overhead allocated Fabrication Finishing Requirement 2. Calculate the amount of under- or overallocated overhead in each department and in total. (Use parentheses or a minus sign to enter overallocated amounts.) Underallocated (Overallocated) Fabrication Finishing Total Requirement 3. How much of the under- or overallocated overhead will be prorated to (a) work-in-process inventory, (b) finished-goods inventory, and (c) cost of goods sold based on the ending balance (before proration) in each of the three accounts? Proration of (over) under MOH Work-in-Process Finished Goods Cost of Goods Sold What will be the balance in work-in-process, finished goods, and cost of goods sold after proration? Ending Balance (adjusted) Work-in-Process Finished Goods Cost of Goods Sold Requirement 4. What would be the effect of writing off under- and overallocated overhead to cost of goods sold? Would it be reasonable for Trusty Designs to change to this simpler method? (Enter percentage values rounded to the nearest tenth percent, X.X%.) If the writeoff approach is used, the ending balance in Cost of Goods Sold would be $ Cost of Goods Sold would would be reasonable increase by %. Because this is to use the simpler method of charging off to Cost of Goods Sold. amount it Data table Manufacturing overhead rate (fabrication department) Manufacturing overhead rate (finishing department) Machine-hours (fabrication department) for May Direct manuf. labor-hours (finishing department) for $9 per machine-hour $18 per direct manuf. labor- hour 3,000 machine-hours May 1,500 labor-hours Work-in-process inventory, May 31 Finished-goods inventory, May 31 $ 82,500 $ 137,500 Cost of goods sold, May $ 330,000 Print Done