The Finer furniture company produces expensive desks for executives. The wood for the desks are cut into
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The Finer furniture company produces expensive desks for executives. The wood for the desks are cut into standard sizes and the desks are assembled in the Construction and Assembly (C&A) dept. The assembled desk are then sent to the Finishing Dept. to be stained. Overhead costs in the C&A dept are allocated to production using machine-hours, and overhead costs in the Finishing Dept. are allocated using direct labor hours.
Finer Furniture uses a normal costing system and has the following data for 2008
Calculate the over- or under- allocated overhead for each of the C&A and Finishing depts. in 2008.
Calculate the ending balances in work in process, finished goods and cost of goods sold if the under- or over- allocated overhead amounts in each dept are:
Written off to cost of goods sold
Prorated based on the ending balance (before proration) in each of the three accounts
Prorated based on the overhead allocated in 2008 (before proration) in the ending balances in each of the three accounts.
Which method would you choose?
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Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0136126638
13th Edition
Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav
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