Suzanne 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. + 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 manufacturing overhead costs Budgeted indirect cost rate 28 $ 784,000 Actual indirect costs incurred 1,134,000 Account The manufacturing overhead allocated during the year is $ Identify the formula and calculate the underallocated or overallocated manufacturing overhead. (Use parentheses or a minus sign to report overhead overallocated.) Underallocated (overallocated) indirect costs 378,000 Work-in-process control Finished goods control Cost of goods sold Total Account Balance (Before Proration) $ $ $ Budgeted labor hours 28,000 $ 44,000 57,000 1,200,000 1,301,000 756,000. $ $ Finally, calculate the manufacturing overhead in each account balance allocated in the curent year, and then prorate the underallocated or overallocated manufacturing overhead to Work-in-Process one decimal Control, Finished Goods Control, and Cost of Goods Sold accounts based on the allocated manufacturing overhead in each account balance using normal costing. (Enter percentages point, X.X%.) Indirect costs allocated 756,000 I Manufacturing Overhead in Each Account Balance Actual Direct Allocated in the Manufacturing Current Year (Before Labor-Hours Proration) 675 1,215 25,110 27,000 = $ = = $ Manufacturing Overhead as a Proration Percent of Total Amount % % % % Account Balance (After) Proration)

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Suzanne 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.
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
28
Budgeted manufacturing overhead costs
$
784,000
$
Actual indirect costs incurred
1,134,000
The manufacturing overhead allocated during the year is
$
Identify the formula and calculate the underallocated or overallocated manufacturing overhead. (Use parentheses or a minus sign to report overhead overallocated.)
Underallocated (overallocated)
indirect costs
378,000
Account
Work-in-process control
Finished goods control
Cost of goods sold
Total
Account
Balance
(Before
Proration)
$
$
$
$
Budgeted labor hours
28,000
$
44,000
57,000
1,200,000
1,301,000
Finally, calculate the manufacturing overhead in each account balance allocated in the curent year, and then prorate the underallocated or overallocated manufacturing overhead 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. (Enter percentages to one decimal
point, X.X%.)
756,000.
Indirect costs allocated
756,000
Actual Direct
Manufacturing
Labor-Hours
675
1,215
25,110
27,000
$
=
Manufacturing
Overhead in Each
Account Balance
Allocated in the
Current Year (Before
Proration)
= $
Manufacturing
Overhead as a
Proration
Percent of Total Amount
%
%
%
%
Account
Balance
(After)
Proration)

Account
Work-in-process control
Finished goods control
Cost of goods sold
Total
Account Balance
(Before Proration)
44,000
57,000
1,200,000
1,301,000
Budgeted manufacturing overhead costs
Budgeted direct manufacturing labor hours
Actual manufacturing overhead costs
Actual direct manufacturing labor-hours
Actual Direct
Manufacturing
Labor-Hours
$
675
1,215
25,110
27,000
784,000
28,000 hours
1,134,000
27,000 hours

Expert Solution

Step 1 Introduction

Proration is the method of allocation of various overheads (i.e, manufacturing or works overhead, administrative overheads, etc) by allocating to COGS, FG, WIP, etc. When there is under-applied overhead, adjustment is given to the overhead account so as to increase the overhead and when there is over-applied overhead, adjustment is given to the overhead account so as to decrease the overhead. Such proration is done on the basis of appropriate proportion.

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