Question

Consider the following selected cost data for the All- In Company for 2012.
Budgeted manufacturing overhead costs ......... $ 4,520,000
Budgeted labor- hours ................. 226,000
Actual manufacturing overhead costs......... $ 4,388,000
Actual labor- hours................ 217,000

The company uses normal costing. Its job- costing system has a single manufacturing overhead cost pool. Costs are allocated to jobs using a budgeted labor- hour rate. Any amount of under- or overallocation is written off to Cost of Goods Sold.

Required
1. Compute the budgeted manufacturing overhead rate.
2. Prepare T- accounts to record the allocation of manufacturing overhead.
3. Compute the amount of under- or overallocation of manufacturing overhead. Is the amount large enough to require the manager to prorate overhead costs between cost of goods sold, work- in- process inventory, and finished goods inventory? Explain. Record entries in T- accounts to dispose of this amount.



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  • CreatedJanuary 15, 2015
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