Haley costs. 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 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 Information Account Account Balance (Before Proration) Work-in-process control $ Finished goods control $ Cost of goods sold Total $ $ 35,000 65,000 1,700,000 1,800,000 Actual Direct Manufacturing Labor-Hours 896 1,344 25,760 28,000 - X Manufacturing Overhead Costs Budgeted manufacturing overhead costs Budgeted direct manufacturing labor hours Actual manufacturing overhead costs Actual direct manufacturing labor-hours Print Done $ $ 1,116,000 31,000 hours 1,288,000 28,000 hours

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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.)
Budgeted indirect cost
rate
Information
Account
Work-in-process control
Finished goods control
Cost of goods sold
Total
Account Balance
(Before Proration)
GA
$
GAGA
35,000
65,000
1,700,000
1,800,000
Actual Direct
Manufacturing
Labor-Hours
896
1,344
25,760
28,000
X
Manufacturing Overhead Costs
Budgeted manufacturing overhead costs
Budgeted direct manufacturing labor hours
Actual manufacturing overhead costs
Actual direct manufacturing labor-hours
Print
Done
$
1,116,000
31,000 hours
1,288,000
28,000 hours

Expert Solution

Step 1

$B u d g e t e d i n d i r e c t \cos t r a t e = \frac{B u d g e t e d m a n u f a c t u r i n g o v e r h e a d \cos t s}{B u d g e t e d d i r e c t m a n u f a c t u r i n g l a b o r h o u r s}$

$\begin{array}{rcl} M a n u f a c t u r i n g o v e r h e a d a l l o c a t e d d u r i n g t h e y e a r & = & A c t u a l d i r e c t m a n u f a c t u r i n g l a b o r h o u r s \times B u d g e t e d i n d i r e c t \cos t r a t e \end{array}$

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