Proration of overhead. (Z. Iqbal, adapted) The Zaf Radiator Company uses a normal-costing system with a...
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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: Budgeted manufacturing overhead costs $4,800,000 Overhead allocation base Machine-hours Budgeted machine-hours Manufacturing overhead costs incurred 80,000 $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 4,000 1,250,000 Work-in-Process Control 750,000 1. Compute the budgeted manufacturing overhead rate for 2017. 2. Compute the under- or overallocated manufacturing overhead of Zat Radiator in 2017. Dispose of this 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 hased on the overhead allocated in 2017 (before proration) in the ending balances of Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold 3. Which method do you prefer in requirement 2? Explain. Required 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: Budgeted manufacturing overhead costs $4,800,000 Overhead allocation base Machine-hours Budgeted machine-hours Manufacturing overhead costs incurred 80,000 $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 4,000 1,250,000 Work-in-Process Control 750,000 1. Compute the budgeted manufacturing overhead rate for 2017. 2. Compute the under- or overallocated manufacturing overhead of Zat Radiator in 2017. Dispose of this 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 hased on the overhead allocated in 2017 (before proration) in the ending balances of Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold 3. Which method do you prefer in requirement 2? Explain. Required
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Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan
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