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430 Proration eof overhead. The Ride-On-Wave Conpany (ROW) produces a line of non-motorized boats. ROW es a normal- costing system and allocates manufacturing overhead using direct manufacturing labor cont The following data are for 2014 Budgetod manufacturing overhcad cost S125,000 Budgeted direct mamufacturi $250,000 ng tabor cost Actual manufacturing overhead cost S117,000 Actual direct manufacturing labor cost $228.000 Inventory balances on December 31, 2014, were as follows 2014 direct mamufacturing Account Ending balance labor cost in ending balance Work in process S 50,700 $ 20,520 Finished goods 245,050 59,280 Cost of goods sold 549,250 148,200 1. Calculate the manufacturing overhead allocation rate 2. Compute the amount of under- or overallocated manufacturing overhead 3. Calculate the ending balances in work in process finished goods, and cost of goods sold if under- or overallocated manufacturing overhead is as follows a. Written off to cost of goods sold b. Prorated based on ending balances (before proration) in cach of the three accounts c. Prorated bascd on the overhead allocated in 2014 in the ending balances (before proration) in cach of the three accounts 4. Which method would you choose? Justify your answer

430 Proration eof overhead. The Ride-On-Wave Conpany (ROW) produces a line of non-motorized boats. ROW es a normal- costing system and allocates manufacturing overhead using direct manufacturing labor cont The following data are for 2014 Budgetod manufacturing overhcad cost S125,000 Budgeted direct mamufacturi $250,000 ng tabor cost Actual manufacturing overhead cost S117,000 Actual direct manufacturing labor cost $228.000 Inventory balances on December 31, 2014, were as follows 2014 direct mamufacturing Account Ending balance labor cost in ending balance Work in process S 50,700 $ 20,520 Finished goods 245,050 59,280 Cost of goods sold 549,250 148,200 1. Calculate the manufacturing overhead allocation rate 2. Compute the amount of under- or overallocated manufacturing overhead 3. Calculate the ending balances in work in process finished goods, and cost of goods sold if under- or overallocated manufacturing overhead is as follows a. Written off to cost of goods sold b. Prorated based on ending balances (before proration) in cach of the three accounts c. Prorated bascd on the overhead allocated in 2014 in the ending balances (before proration) in cach of the three accounts 4. Which method would you choose? Justify your answer

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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430 Proration of overbead. The Ride-On-Wave Company (ROW) produces a line of non-motorized boats. RoW uses a normal- costing system and allocates manufacturing overhead using direct manufacturing labor cont The following data are for 2014: Budgetod manufacturing overhead cost $125,000 Budgeted direct mamifacturi $250,000 ng labor cost Actual manufacturing overhead cost Actual direct mamufacturing labor cost S117,000 $228.000 Inventory balances on December 31, 2014, were as follows 2014 direct manufacturing Account Ending balance labor cost in ending balance Work in process $ 50,700 $ 20,520 Finished goods 245,050 59.280 Cost of goods sold 549,250 148,200 1. Calculate the manufacturing overhcad allocation rate 2. Compute the amount of under- or overallocated manufacturing overhead. 3. Calculate the ending balances in work in process, finished goods, and cost of goods sold if under- or overallocatod manufacturing overhead is as follows a. Written off to cost of goods sold b. Prorated bascd on ending balances (before proration) in cach of thc three accounts c. Prorated bascd on the overhead allocated in 2014 in the ending balances (before proration) in cach of the three accounts 4. Which method would you choose? Justify your answer 3-21 CVP analysis, income tases. Brooke Motors is a snall car dealership. On average, it sells a car for $27,000, which it purchases from the manufacturer for $23,000, Each month, Brooke Motors pays S48,200 in rent and utilities and S68,000 for salespoople's salaries. In addition to their salaries, salespeople are paid a commission of S0 for each car they sell. Brooke Motors also spends $13,000 cach month for local advertisements. Its tax rate is 40% L. How many cars must Brooke Motors sell each month to break even? 2. Brooke Motors has a target monthly net income of $51,000. What is its target monthly operating income? How many cars must be sold cach month to reach the target monthly net income of $51,000?
Transcribed Image Text:430 Proration of overbead. The Ride-On-Wave Company (ROW) produces a line of non-motorized boats. RoW uses a normal- costing system and allocates manufacturing overhead using direct manufacturing labor cont The following data are for 2014: Budgetod manufacturing overhead cost $125,000 Budgeted direct mamifacturi $250,000 ng labor cost Actual manufacturing overhead cost Actual direct mamufacturing labor cost S117,000 $228.000 Inventory balances on December 31, 2014, were as follows 2014 direct manufacturing Account Ending balance labor cost in ending balance Work in process $ 50,700 $ 20,520 Finished goods 245,050 59.280 Cost of goods sold 549,250 148,200 1. Calculate the manufacturing overhcad allocation rate 2. Compute the amount of under- or overallocated manufacturing overhead. 3. Calculate the ending balances in work in process, finished goods, and cost of goods sold if under- or overallocatod manufacturing overhead is as follows a. Written off to cost of goods sold b. Prorated bascd on ending balances (before proration) in cach of thc three accounts c. Prorated bascd on the overhead allocated in 2014 in the ending balances (before proration) in cach of the three accounts 4. Which method would you choose? Justify your answer 3-21 CVP analysis, income tases. Brooke Motors is a snall car dealership. On average, it sells a car for $27,000, which it purchases from the manufacturer for $23,000, Each month, Brooke Motors pays S48,200 in rent and utilities and S68,000 for salespoople's salaries. In addition to their salaries, salespeople are paid a commission of S0 for each car they sell. Brooke Motors also spends $13,000 cach month for local advertisements. Its tax rate is 40% L. How many cars must Brooke Motors sell each month to break even? 2. Brooke Motors has a target monthly net income of $51,000. What is its target monthly operating income? How many cars must be sold cach month to reach the target monthly net income of $51,000?
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