REVEL for Horngren's Cost Accounting: A Managerial Emphasis -- Access Card (16th Edition) (What's New in Accounting)
16th Edition
ISBN: 9780134789705
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 4, Problem 4.39P
Proration of
| Budgeted manufacturing overhead costs | $4,800,000 |
| Overhead allocation base | Machine-hours |
| Budgeted machine-hours | 80,000 |
| Manufacturing overhead costs incurred | $4,900,000 |
| Actual machine-hours | 75,000 |
Machine-hours data and the ending balances (before proration of under- or overallocated overhead) are as follows:
| Actual Machine-Hours | 2017 End-of-Year Balance | |
| Cost of Goods Sold | 60,000 | $8,000,000 |
| Finished Goods Control | 11,000 | 1,250,000 |
| Work-in-Process Control | 4,000 | 750,000 |
- 1. Compute the budgeted manufacturing overhead rate for 2017.
Required
- 2. Compute the under- or overallocated manufacturing overhead of Zaf Radiator in 2017. Dispose of the amount using the following:
- a. Write-off to Cost of Goods Sold
- b. Proration based on ending balances (before proration) in Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold
- c. Proration based on the overhead allocated in 2017 (before proration) in the ending balances Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold
- 3. Which method do you prefer in requirement 2? Explain.
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Proration of overhead. (Z. Iqbal, adapted) The Zaf Radiator Company uses a normal-costing system with a single manufacturing overhead cost pool and machine-hours as the cost-allocation base. The following data are for 2017:
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Chapter 4 Solutions
REVEL for Horngren's Cost Accounting: A Managerial Emphasis -- Access Card (16th Edition) (What's New in Accounting)
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