Question

3 The Hauty 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 requirements 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 rate (1) (2) - Requirement 2. Compute the under or overallocated manufacturing overhead of Hary 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 - underallocated (overallocated) a. Dispose of this amount using a write-off to Cost of Goods Sold Show the account balances after the write-off Account Balance After Proration Cost of Goods Sold Finished Goods Control Work-in-Process Control b. Dispose of the amount using a proration based on ending balances (before proration) in Work in Process Control Finished Goods Control and Cost of Goods Sold. Begin by selecting the formula to calculate the adjustment to each account. Then enter the amounts in the formula (Enter the proportions as a decimal to three decimal places. "XXX". Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted) Adjustment COGS WP Now enter the account balances after the write-off. Account Balance After Proration Cost of Goods Sold Finished Goods Control Work-in-Process Control c. Dispose of the amount using a 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. Begin by selecting the formula to calculate the adjustment to each account. Then enter the amounts in the formula (Enter the proportions as a decimal to

Answer 1

Compute the budgeted manufacturing overhead rate for 2017 / Budgeted machine-hours Budgeted manufacturing overhead 4,800,000 Budgeted Manufacturing Overhead Rate 60 Per Machine Hour 80,000 2. Compute the under or over allocated manufacturing overhead of Hazy radiator in 2017. Dispose of this amount using the following: A. Write off to costs of goods sold Manufacturing Overhead incurred Manufacturing Overhead underallocated (overallocated) 450,000 4,950,000 Manufacturing Overhead allocated 4,500,000 (75000*60) - Account Beginning Balance Account Balance (After Proration) Underallocated Manufacturing Overhead (B) 450,000 (A) (A+B) Cost of Goods Sold Finished Goods Work in Process Total 8,000,000 1,250,000 750,000 10,000,000 8,450,000 1,250,000 750,000 10,450,000 450,000 Cost of Goods Sold Finished Goods Control Work in Process Control Account Balance (After Proration) 8,450,000 1,250,000 750,000 64

B. Proration based on ending balances (before proration) in work-in-process control, finished goods control and costs of goods sold Allocation Rate (B) Account Cost of Goods Sold Finished Goods Work in Process Total Ending Balance (A) 8,000,000 1,250,000 750,000 10,000,000 0.800 0.125 0.075 Adjustment (A*B) 360000 56250 33750 450,000 Cost of Goods Sold Finished Goods Control Work in Process Control Account Balance (After Proration) 8,360,000 1,306,250 783,750 C. Proration based on the overhead allocated in 2014 (before proration) in the ending balances of Work-in-process control, finished goods control, and cost of goods sold Calculation of Allocation rate Actual Machine Hours Overhead Rate Cost of Goods Sold Finished Goods Work in Process 60,000 11,000 4,000 Total Overheads Allocated 3,600,000 660,000 240,000 4,500,000

Allocation Rate (B) Account Cost of Goods Sold Finished Goods Work in Process Total Ending Balance (A) 8,000,000 1,250,000 750,000 10,000,000 0.800 0.147 0.053 Adjustment (A*B) 360,000 66,150.00 23,850.00 450,000 Account Balance (After Proration) 8,360,000 1,316,150 773,850 Cost of Goods Sold Finished Goods Control Work in Process Control 100 101