Question

In: Accounting

The Zef Radiator Company uses a​ normal-costing system with a single manufacturing overhead cost pool and​...

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​:

Budgeted Manufacturing Overhead Costs $ 4,875,000
Overhead Allocation Base machine-hours
Budgeted machine-hours 75,000
Manufacturing Overhead Costs Incurred $ 5,125,000
Actual machine-hours 80,000

Machine-hours data and the ending balances​ (before proration of​ under- or overallocated​ overhead) are as​ follows:

Actual Machine-Hours 2017 End-of-Year Balance
Cost of Goods Sold 60,000 $ 8,500,000
Finished Goods Control 12,000 1,000,000
Work-in-Process Control 8,000 500,000

Question:

1.

 Compute the budgeted manufacturing overhead rate for 2017.

2.

 Compute the​ under- or overallocated manufacturing overhead of Zef 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.

Solutions

Expert Solution

ekkarill92 answered 11 months ago
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