Donna Corporation manufactures custom cabinets for kitchens. It uses a normalcosting system with two direct-cost categories—direct materials and direct manufacturing labor—and one indirect-cost pool, manufacturing overhead costs. It provides the following information about manufacturing overhead costs for 2017. Budgeted manufacturing overhead costs $960,000 Budgeted direct manufacturing labor-hours 32,000 hours Actual manufacturing overhead costs $992,000 Actual direct manufacturing labor-hours 31,000 hours The following information is available as of December 31, 2017. Account Account Balance (Before Proration) Manufacturing Overhead in Each Account Balance Allocated in the Current Year (Before Proration) Work-in-Process Control $ 40,000 $ 14,400 Finished Goods Control 60,000 24,000 Cost of Goods Sold 1,900,000 921,600 $2,000,000 $960,000 Calculate the underallocated or overallocated manufacturing overhead at the end of 2017 and prorate it to Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold accounts based on the allocated manufacturing overhead in each account balance using normal costing
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Donna Corporation manufactures custom cabinets for kitchens. It uses a normalcosting system with two direct-cost categories—direct materials and direct manufacturing labor—and one indirect-
the following information about manufacturing overhead costs for 2017.
Budgeted manufacturing overhead costs $960,000
Budgeted direct manufacturing labor-hours 32,000 hours
Actual manufacturing overhead costs $992,000
Actual direct manufacturing labor-hours 31,000 hours
The following information is available as of December 31, 2017.
Account
Account Balance
(Before Proration)
Manufacturing Overhead in Each
Account Balance Allocated in the
Current Year (Before Proration)
Work-in-Process Control $ 40,000 $ 14,400
Finished Goods Control 60,000 24,000
Cost of Goods Sold 1,900,000 921,600
$2,000,000 $960,000
Calculate the underallocated or overallocated manufacturing overhead at the end of 2017
and prorate it to Work-in-Process Control, Finished Goods Control, and Cost of Goods
Sold accounts based on the allocated manufacturing overhead in each account balance using normal costing.
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