Haley Corporation manufactures custom cabinets for kitchens. It uses a normal-costing system with two direct cost categories-direct materials and direct manufacturing labor-and one indirect-cost pool, manufacturing overhead costs. View the manufacturing overhead costs information for 2020. View the other information available as of December 31, 2020. Requirement Calculate the underallocated or overallocated manufacturing overhead at the end of 2020 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 Begin by calculating the budgeted indirect cost rate. Identify the formula and then calculate the rate. (Assume the cost allocation base is direct labor hours.) + + = Budgeted indirect cost rate
Haley Corporation manufactures custom cabinets for kitchens. It uses a normal-costing system with two direct cost categories-direct materials and direct manufacturing labor-and one indirect-cost pool, manufacturing overhead costs. View the manufacturing overhead costs information for 2020. View the other information available as of December 31, 2020. Requirement Calculate the underallocated or overallocated manufacturing overhead at the end of 2020 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 Begin by calculating the budgeted indirect cost rate. Identify the formula and then calculate the rate. (Assume the cost allocation base is direct labor hours.) + + = Budgeted indirect cost rate
Chapter1: Financial Statements And Business Decisions
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Haley Corporation manufactures custom cabinets for kitchens. It uses a normal-costing system with two direct cost categories-direct materials
and direct manufacturing labor-and one indirect-cost pool, manufacturing overhead costs.
View the manufacturing overhead costs information for 2020.
View the other information available as of December 31, 2020.
Requirement
Calculate the underallocated or overallocated manufacturing overhead at the end of 2020 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.
Begin by calculating the budgeted indirect cost rate. Identify the formula and then calculate the rate. (Assume the cost allocation base is direct
labor hours.)
Manufacturing Overhead Costs
Budgeted manufacturing overhead costs
Budgeted direct manufacturing labor hours
Actual manufacturing overhead costs
Actual direct manufacturing labor-hours
1,116,000
31,000 hours
1,288,000
28,000 hours
Information
=
=
Account
Budgeted indirect cost
rate
Work-in-process control
Finished goods control
Cost of goods sold
Total
Account Balance
(Before Proration)
$
$
$
$
35,000
65,000
1,700,000
1,800,000
Actual Direct
Manufacturing
Labor-Hours
896
1,344
25,760
28,000
Expert Solution
Step 1 Introduction
The overhead rate is calculated as estimated overhead cost divided by estimated base activity. The overhead is said to be under-allocated, when actual overhead costs incurred are more than the applied overhead costs.
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