Question

cons 3D SmartArt Chart My Add-ios - Comment Video Add-ins Text Symbols Nat iadiavor Company usoa a normal cog systas with a single Company uses a normal costing systom with a single MOH cost pool and MH as the Budgeted manufacturing overhead IMOH) Overhoad allocation base Budgeted machine-hours (MH) Manufacturing overhead (MOH) incurred Actual machine-hours (MH machine hou 75,000 as follows: 2019 End-of-Year Cost of Goods Sold 60,000 11,000 4,000 1,250,000 750,000 Work-in-Process Control 1. Compute the budgeted manufacturing overhead rate for 2019 2. Compute the under- or ovorallocated monufacturing overhead of Nat Radiator in 2019. Dispose of this under- or overallocated emount using: 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 allocated overhe Work-in-Process Control, Finishod Goods Control, and Cost of Goods Sold. 3. Which method do you prefer in requirement 27 Explain.

Answer 1

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Requirement 1
Budgeted Manufacturing ovehread Rate:
Budgeted Manufacturing Overhead	A	$           4,800,000
Divided by: Budgeted Machine Hours	B	80,000	Hours
Budgeted Manufacturing ovehread Rate	A/B	$                       60
Requirement 2
Actual Overhead		$           4,900,000
Applied Overheads (75,000 Hours*$ 60)		$           4,500,000
Under applied overheads		$              400,000
a. Write off to Cost of Goods Sold
	Account Balance	Write-off	After proration
A	B	C	D=B+C
Work in Process	$                            750,000	$                        -	$            750,000
Finished Goods	$                         1,250,000	$                        -	$         1,250,000
Cost of Goods Sold	$                         8,000,000	$              400,000	$         8,400,000
Total	$                       10,000,000	$              400,000	$       10,400,000
b. Write off
	Account Balance	Ratio	Write-off	After proration
A	B	C	D=400000*C	E=B+D
Work in Process	$                            750,000	7.5%	$              30,000	$           780,000
Finished Goods	$                         1,250,000	12.5%	$              50,000	$       1,300,000
Cost of Goods Sold	$                         8,000,000	80.0%	$            320,000	$       8,320,000
Total	$                       10,000,000	100.0%	$            400,000	$     10,400,000
c. Write off
	Account Balance	Balance included	Ratio	Write-off	After proration
A	B	Working below	C	D=400000*C	E=B+D
Work in Process	$                            750,000	$              240,000	5.3%	$             21,333	$           771,333
Finished Goods	$                         1,250,000	$              660,000	14.7%	$             58,667	$       1,308,667
Cost of Goods Sold	$                         8,000,000	$           3,600,000	80.0%	$           320,000	$       8,320,000
Total	$                       10,000,000	$           4,500,000	100.0%	$           400,000	$     10,400,000
Working:
Work in Process	4000 Machine Hours*60
Finished Goods	11000 Machine Hours*60
Cost of Goods Sold	60000 Machine Hours*60
Requirement 3
Alternative C is prefereable as balances in this alternative is same which would have been in case of
actual indirect cost usage