Proration of overhead the Ride-On-Water Company (ROW) produces a line of non-motorize boats. ROW uses a normal
Question:
Proration of overhead the Ride-On-Water Company (ROW) produces a line of non-motorize boats. ROW uses a normal costing system and allocates manufacturing overhead using direct manufacturing labor cost. The following data is for 2009:
1. Calculate the overhead allocation rate.
2. Compute the amount of under- or over allocated overhead
3. Calculate the ending balances in work in process, finished goods and cost of goods sold if underallocated overhead is:
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 2009 in the ending balances (before proration) in each of the three accounts.
4. Which method makes the most sense? Justify your answer.
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 978-0136126638
13th Edition
Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav