1) Orpa Company produces non-motorized boats. Orpa uses a normal costing system and allocates manufacturing overhead...

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1) Orpa Company produces non-motorized boats. Orpa uses a normal costing system and allocates manufacturing overhead costs using direct labor cost. The following data is for 2020: Budgeted manufacturing overhead cost $157,500 Budgeted direct manufacturing labor cost $225,000 Actual manufacturing overhead cost $172,000 Actual direct manufacturing labor cost $250,000 Inventory balances on December 31, 2020 were: Account Ending Balance 2020 Direct Labor Hours used in ending balance Work in Process $70,000 3,000 Finished Goods $235,000 7,500 Cost of Goods Sold $495,000 14,500 *Wage rate for the year was $10 per hour Instructions: i. Calculate the overhead allocation rate. (2) ii. Compute the amount of under or overallocated overhead. (2) iii. Calculate the ending balances in work-in-process, finished goods and cost of goods sold if under or overallocated overhead is prorated based on overhead allocated in 2020 in the ending balances (before proration) in each of the three accounts. (6) iv. Journalize the adjusting entry to close the balance of under or overallocated overhead. (5) 1) Orpa Company produces non-motorized boats. Orpa uses a normal costing system and allocates manufacturing overhead costs using direct labor cost. The following data is for 2020: Budgeted manufacturing overhead cost $157,500 Budgeted direct manufacturing labor cost $225,000 Actual manufacturing overhead cost $172,000 Actual direct manufacturing labor cost $250,000 Inventory balances on December 31, 2020 were: Account Ending Balance 2020 Direct Labor Hours used in ending balance Work in Process $70,000 3,000 Finished Goods $235,000 7,500 Cost of Goods Sold $495,000 14,500 *Wage rate for the year was $10 per hour Instructions: i. Calculate the overhead allocation rate. (2) ii. Compute the amount of under or overallocated overhead. (2) iii. Calculate the ending balances in work-in-process, finished goods and cost of goods sold if under or overallocated overhead is prorated based on overhead allocated in 2020 in the ending balances (before proration) in each of the three accounts. (6) iv. Journalize the adjusting entry to close the balance of under or overallocated overhead. (5)

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Answer i Overhead allocation rate Budgeted Manufacturing Overhead Budgeted Direct Manufacturing Labo... View the full answer