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 1 year ago
Next > < Previous

Related Solutions

The Wamth Radiator Company uses a​ normal-costing system with a single manufacturing overhead cost pool and​...
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​: Budgeted Manufacturing Overhead Costs $ 5,225,000 Overhead Allocation Base machine-hours Budgeted machine-hours 95,000 Manufacturing Overhead Costs Incurred $ 5,425,000 Actual machine-hours 100,000 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 75,000 $ 9,750,000 Finished Goods Control...
Tucson Co. uses a normal costing system. Factory (or Manufacturing) overhead is applied at a budgeted...
Tucson Co. uses a normal costing system. Factory (or Manufacturing) overhead is applied at a budgeted rate based on direct labor cost. At the end of the period, there are two unfinished jobs. Additional information is available as follows:                   Direct materials used                             $ 50,000                   Direct labor costs                                   $100,000                   Beginning Work-in-process inventory $100,000                   Cost of goods manufactured                  $150,000                   Beginning Finished goods inventory     $140,000                     Ending Finished goods inventory          $110,000                   Actual factory overhead incurred...
The Collins Company uses a job-order costing system and applies manufacturing overhead cost to jobs on...
The Collins Company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of materials used in production. At the beginning of the most recent year, the following estimates were made as a basis for computing the predetermined overhead rate for the year: Manufacturing overhead cost: $200,000 Direct materials cost: $160,000 The following transactions took place during the year (all purchases and services were acquired on account): a.) Raw materials purchased: $86,000....
Erkens Company uses a job costing system with normal costing and applies factory overhead on the...
Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $1,980,000 of factory overhead costs and use 66,000 machine hours. Erkens Company recorded the following events during the month of April: Purchased 180,000 pounds of materials on account; the cost was $5.00 per pound. Issued 120,000 pounds of materials to production, of which 15,000 pounds were used...
Erkens Company uses a job costing system with normal costing and applies factory overhead on the...
Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $1,680,000 of factory overhead costs and use 60,000 machine hours. Erkens Company recorded the following events during the month of April: Purchased 182,000 pounds of materials on account; the cost was $5.10 per pound. Issued 121,000 pounds of materials to production, of which 15,500 pounds were used...
Erkens Company uses a job costing system with normal costing and applies factory overhead on the...
Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $1,860,000 of factory overhead costs and use 60,000 machine hours. Erkens Company recorded the following events during the month of April: a. Purchased 214,000 pounds of materials on account; the cost was $5.10 per pound. b. Issued 137,000 pounds of materials to production, of which 23,500 pounds...
Arensky Company uses normal costing to account for overhead in its job costing system. There are...
Arensky Company uses normal costing to account for overhead in its job costing system. There are 2 departments in the company: Designing and Machining. The Designing Dept. is labor intensive; the Machining Dept. is machine intensive. (OH= Overhead; DLH= Direct Labor Hours; MH= Machine Hours.) The budget for 2019 is as follows: Designing   Machining Est. OH $2,000,000 $5,600,000 Est DLH 40,000 Hours 10,000 Hours Est MH. 20,000 Hours 70,000 Hours Actual Results are as follows: Designing Machining Actual OH $2,100,000...
Erkens Company uses a job costing system with normal costing and applies factory overhead on the...
Erkens Company uses a job costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $2,553,000 of factory overhead costs and use 69,000 machine hours. Erkens Company recorded the following events during the month of April: Purchased 200,000 pounds of materials on account; the cost was $6.00 per pound. Issued 130,000 pounds of materials to production, of which 20,000 pounds were used...
The Savage Garden Company uses normal costing in its job-order cost system. The predetermined overhead rate...
The Savage Garden Company uses normal costing in its job-order cost system. The predetermined overhead rate is 3 times the direct labor cost. Job 70 was completed during 2019. This job was charged $4,000 for direct materials, $2,000 for direct labor, and $6,000 for allocated overhead. The job consisted of 10 units. After the job was completed, but before it was sent to Finished Goods, it was determined that 2 of these units were spoiled. If the 2 bad units...
PROBLEM ONE The Kitty Manufacturing Company uses a standard absorption costing job costing system. Manufacturing overhead...
PROBLEM ONE The Kitty Manufacturing Company uses a standard absorption costing job costing system. Manufacturing overhead is allocated to products on the basis of standard direct labor hours. At the beginning of 20xx, Kitty adopted the following standards for its manufacturing costs: Direct materials           3 lb. @ $5 per lb. Direct labor                 5 hr @ $10 per hour Overhead: Variable           $5 per direct labor hour Fixed               $10 per direct labor hour The denominator level for total...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT