The Ride−On−WonderCompany (ROW) produces a line of non-motorized boats. ROW uses a normal-costing system and allocates manufacturing overhead using direct manufacturing labor costs. The following data are for 2017: Read the requirements3. Requirement 1. Calculate the manufacturing overhead allocation rate. Identify the formula and calculate the manufacturing overhead allocation rate. (Enter the result as a whole number.) (1) / (2) = Overhead allocation rate / = (3) Requirement 2. Compute the amount of under-or overallocated manufacturing overhead. Identify the formula and calculate the under-or manufacturing overallocated overhead. (Use parentheses or a minus sign to report overhead overallocated.) (4) – (5) = Underallocated (overallocated) – = Requirement 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 each of the three accounts, (c) prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts. (a.) Calculate the ending balances in work in process, finished goods, and cost of goods sold if under- or overallocated manufacturing overhead is written off to cost of goods sold. Account Ending Balance Work in process Finished goods Cost of goods sold (b.) Begin by identifying the formula and calculating the adjustment to each account assuming under- or overallocated manufacturing overhead is prorated based on ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) (b.) (6) x (7) = Adjustment WIP x = FG x = CGS x = Now calculate the ending balances in work in process, finished goods, and cost of goods sold if under- or overallocated manufacturing overhead is prorated based on ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show adjustments to be subtracted.) (b.) (8) + (9) = Ending Balance (adjusted) WIP + = FG + = CGS + = (c.) Begin by identifying the formula and calculating the adjustment to each account assuming under- or overallocated manufacturing overhead is prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) (c.) (10) x (11) = Adjustment WIP x = FG x = CGS x = (c.) Enter the formula and calculate the ending balances in work in process, finished goods, and cost of goods sold if under- or overallocated manufacturing overhead is prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) (c.) (12) + (13) = Ending Balance (adjusted) WIP + = FG + = CGS + = Requirement 4. Which method would you choose? Justify your answer. The method that makes the most sense is to (14) . The amount of the over-under allocation amount is (15) so (16) . 1: Data Table Budgeted manufacturing overhead cost $132,000 Budgeted direct manufacturing labor cost $220,000 Actual manufacturing overhead cost $134,000 Actual direct manufacturing labor cost $220,000 2: Data Table 2017 direct manufacturing Account Ending Balance labor cost in ending balance Work in process $42,750 $19,800 Finished goods 247,950 59,400 Cost of goods sold 564,300 140,800 3: Requirements 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 each of the three accounts c. Prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts 4. Which method would you choose? Justify your answer.

The Ride−On−WonderCompany (ROW) produces a line of non-motorized boats. ROW uses a normal-costing system and allocates manufacturing overhead using direct manufacturing labor costs. The following data are for 2017: Read the requirements3. Requirement 1. Calculate the manufacturing overhead allocation rate. Identify the formula and calculate the manufacturing overhead allocation rate. (Enter the result as a whole number.) (1) / (2) = Overhead allocation rate / = (3) Requirement 2. Compute the amount of under-or overallocated manufacturing overhead. Identify the formula and calculate the under-or manufacturing overallocated overhead. (Use parentheses or a minus sign to report overhead overallocated.) (4) – (5) = Underallocated (overallocated) – = Requirement 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 each of the three accounts, (c) prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts. (a.) Calculate the ending balances in work in process, finished goods, and cost of goods sold if under- or overallocated manufacturing overhead is written off to cost of goods sold. Account Ending Balance Work in process Finished goods Cost of goods sold (b.) Begin by identifying the formula and calculating the adjustment to each account assuming under- or overallocated manufacturing overhead is prorated based on ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) (b.) (6) x (7) = Adjustment WIP x = FG x = CGS x = Now calculate the ending balances in work in process, finished goods, and cost of goods sold if under- or overallocated manufacturing overhead is prorated based on ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show adjustments to be subtracted.) (b.) (8) + (9) = Ending Balance (adjusted) WIP + = FG + = CGS + = (c.) Begin by identifying the formula and calculating the adjustment to each account assuming under- or overallocated manufacturing overhead is prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) (c.) (10) x (11) = Adjustment WIP x = FG x = CGS x = (c.) Enter the formula and calculate the ending balances in work in process, finished goods, and cost of goods sold if under- or overallocated manufacturing overhead is prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) (c.) (12) + (13) = Ending Balance (adjusted) WIP + = FG + = CGS + = Requirement 4. Which method would you choose? Justify your answer. The method that makes the most sense is to (14) . The amount of the over-under allocation amount is (15) so (16) . 1: Data Table Budgeted manufacturing overhead cost $132,000 Budgeted direct manufacturing labor cost $220,000 Actual manufacturing overhead cost $134,000 Actual direct manufacturing labor cost $220,000 2: Data Table 2017 direct manufacturing Account Ending Balance labor cost in ending balance Work in process $42,750 $19,800 Finished goods 247,950 59,400 Cost of goods sold 564,300 140,800 3: Requirements 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 each of the three accounts c. Prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts 4. Which method would you choose? Justify your answer.

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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Question

2017:

Read the requirements3.

Requirement 1. Calculate the manufacturing overhead allocation rate.

Identify the formula and calculate the manufacturing overhead allocation rate. (Enter the result as a whole number.)

(1)

(2)

Overhead allocation rate

(3)

Requirement 2. Compute the amount of under-or overallocated manufacturing overhead.

Identify the formula and calculate the under-or manufacturing overallocated overhead. (Use parentheses or a minus sign to report overhead overallocated.)

(4)

–

(5)

Underallocated (overallocated)

–

Requirement 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 each of the three accounts, (c) prorated based on the overhead allocated in

2017

in the ending balances (before proration) in each of the three accounts.

(a.) Calculate the ending balances in work in process, finished goods, and cost of goods sold if under- or overallocated manufacturing overhead is written off to cost of goods sold.

Account	Ending Balance
Work in process
Finished goods
Cost of goods sold

(b.) Begin by identifying the formula and calculating the adjustment to each account assuming under- or overallocated manufacturing overhead is prorated based on ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.)

(b.)

(6)

(7)

Adjustment

WIP	x	=
FG	x	=
CGS	x	=

Now calculate the ending balances in work in process, finished goods, and cost of goods sold if under- or overallocated manufacturing overhead is prorated based on ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show adjustments to be subtracted.)

(b.)

(8)

(9)

Ending Balance (adjusted)

WIP	+	=
FG	+	=
CGS	+	=

(c.) Begin by identifying the formula and calculating the adjustment to each account assuming under- or overallocated manufacturing overhead is prorated based on the overhead allocated in

2017

in the ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.)

(c.)

(10)

(11)

Adjustment

WIP	x	=
FG	x	=
CGS	x	=

(c.) Enter the formula and calculate the ending balances in work in process, finished goods, and cost of goods sold if under- or overallocated manufacturing overhead is prorated based on the overhead allocated in

2017

in the ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.)

(c.)

(12)

(13)

Ending Balance (adjusted)

WIP	+	=
FG	+	=
CGS	+	=

Requirement 4. Which method would you choose? Justify your answer.

The method that makes the most sense is to

(14)

The amount of the over-under allocation amount is

(15)

(16)

1: Data Table

Budgeted manufacturing overhead cost	$132,000
Budgeted direct manufacturing labor cost	$220,000
Actual manufacturing overhead cost	$134,000
Actual direct manufacturing labor cost	$220,000

2: Data Table

		2017 direct manufacturing
Account	Ending Balance	labor cost in ending balance
Work in process	$42,750	$19,800
Finished goods	247,950	59,400
Cost of goods sold	564,300	140,800

3: Requirements

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 each of the three accounts
c.	Prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts
4.	Which method would you choose? Justify your answer.

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