Question

The Zero 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 rements. Data Table 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 5,850,000 Budgeted machine-hours 90,000 Budgeted manufacturing overhead rate = $ 65 $ Requirement 2. Compute the under-or overallocated manufacturing overhead of Zero 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 5,950,000 Manufacturing overhead allocated $ 5,525,000 = = Manufacturing overhead underallocated (overallocated) $ 425,000 - a. Dispose of this amount using a write-off to Cost of Goods Sold. Show the account balances after the write-off. Account Balance Cost of Goods Sold Finished Goods Control Work-in-Process Control After Proration 340000 63750 21250

Answer 1

	Under-Allocated Overhead Cost	$425,000
a	Dispose this amount to Cost of goods sold(COGS)
		Existing balance	Allocation of Overhead Cost	Balance after allocation
	Cost of goods sold	$8,800,000	$425,000	$9,225,000	(8,800,000+425,000)
	Finished goods control	$1,650,000	0	$1,650,000
	Work in progress Control	$550,000	0	$550,000
		$11,000,000		$11,425,000
b	Proration on ending balances
		Existing balance	Allocation of Overhead Cost		Balance after allocation
	Cost of goods sold	$8,800,000	$340,000	(8,800,000/11,000,000)*425000	$9,140,000
	Finished goods control	$1,650,000	$63,750	(1,650,000/11,000,000)*425000	$1,713,750
	Work in progress Control	$550,000	$21,250	(550,000/11,000,000)*425000	$571,250
		$11,000,000	$425,000		$11,425,000
c	Proration based on overhead allocated in 2017
		Existing balance	Actual machine hours	Overhead allocated		Balance after allocation
	Cost of goods sold	$8,800,000	68,000	$340,000	(68,000/85,000)*425,000	$9,140,000
	Finished goods control	$1,650,000	10,000	$50,000	(10,000/85,000)*425,000	$1,700,000
	Work in progress Control	$550,000	7,000	$35,000	(7,000/85,000)*425,000	$585,000
		$11,000,000	85,000	$425,000		$11,425,000
2	If the amount in underapplied a/c is material, it should be closed to three different accounts—work-in-process (WIP) inventory, finished goods inventory, and cost of goods sold—in proportion to the account balances in these accounts.

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Under-Allocated Overhead Cost $425,000 Dispose this amount to Cost of goods sold(COGS) Cost of goods sold Finished goods control Work in progress Control Existing balance Allocation of Overhead Cost Balance after allocation $8,800,000 $425,000 $9,225,000 (8,800,000+425,000) $1,650,000 $1,650,000 $550,000 $550,000 $11,000,000 $11,425,000 Proration on ending balances Cost of goods sold Finished goods control Work in progress Control Existing balance $8,800,000 $1,650,000 $550,000 $11,000,000 Allocation of Overhead Cost $340,000 (8,800,000/11,000,000)*425000 $63,750 (1,650,000/11,000,000) *425000 $21,250 (550,000/11,000,000)*425000 $425,000 Balance after allocation $9,140,000 $1,713,750 $571,250 $11,425,000 Proration based on overhead allocated in 2017 Existing balance Actual machine hours Cost of goods sold $8,800,000 68,000 Finished goods control $1,650,000 10,000 Work in progress Control $550,000 7,000 $11,000,000 85,000 Overhead allocated $340,000 (68,000/85,000)*425,000 $50,000 (10,000/85,000) *425,000 $35,000 (7,000/85,000)*425,000 $425,000 Balance after allocation $9,140,000 $1,700,000 $585,000 $11,425,000 2 If the amount in underapplied a/c is material, it should be closed to three different accounts—work-in-process (WIP) inventory, finished goods inventory, and cost of goods sold—in proportion to the account balances in these a