K Home Corporation manufactures precision equipment made to order for the semiconductor industry. Home uses two...
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K Home Corporation manufactures precision equipment made to order for the semiconductor industry. Home uses two manufacturing overhead cost pools-one for the overhead costs incurred in its highly automated Machining Department and another for overhead costs incurred in its labour-based Assembly Department. Home uses a normal costing system. It allocates Machining Department overhead costs to jobs based on actual machine-hours using a budgeted machine-hour overhead rate. It allocates Assembly Department overhead costs to jobs based on actual direct manufacturing labour-hours using a budgeted direct manufacturing labour-hour rate. The following data are for the year: (Click the icon to view the data for the year.) Required Data for the year Required Machining Assembly Department Department Budgeted overhead 5,850,000 $ 7,010,000 Budgeted machine-hours (MH) 75,000 0 Budgeted direct manufacturing labour-hours (DMLH) 0 118,000 a. Actual manufacturing overhead costs $ 5,700,000 $ 7,060,000 b. Machine-hours and direct manufacturing labour-hours and the ending balances (before proration of underallocated overhead) are as follows: C. Cost of Goods Sold Finished Goods Work-in-Process Actual Direct Balance Before Actual Machine- Hours 60,000 Manufacturing Labour-Hours 80,100 Proration, 9,000 11,000 End of Year 22,000,000 2,700,000 15,900 26,500 7,300,000 1. Compute the budgeted overhead rates for the year in the Machining and Assembly Departments. 2. Compute the under- or overallocated overhead in each department for the year. Dispose of the under- or overallocated amount in each department using: Immediate write-off to Cost of Goods Sold. Proration based on ending balances (before proration) in Cost of Goods Sold, Finished Goods, and Work-in-Process. Proration based on the allocated overhead amount (before proration) in the ending balances of Cost of Goods Sold, Finished Goods, and Work-in-Process. 3. Which disposition method is preferred in requirement 2? Explain. Print Done - K Home Corporation manufactures precision equipment made to order for the semiconductor industry. Home uses two manufacturing overhead cost pools-one for the overhead costs incurred in its highly automated Machining Department and another for overhead costs incurred in its labour-based Assembly Department. Home uses a normal costing system. It allocates Machining Department overhead costs to jobs based on actual machine-hours using a budgeted machine-hour overhead rate. It allocates Assembly Department overhead costs to jobs based on actual direct manufacturing labour-hours using a budgeted direct manufacturing labour-hour rate. The following data are for the year: (Click the icon to view the data for the year.) Required Data for the year Required Machining Assembly Department Department Budgeted overhead 5,850,000 $ 7,010,000 Budgeted machine-hours (MH) 75,000 0 Budgeted direct manufacturing labour-hours (DMLH) 0 118,000 a. Actual manufacturing overhead costs $ 5,700,000 $ 7,060,000 b. Machine-hours and direct manufacturing labour-hours and the ending balances (before proration of underallocated overhead) are as follows: C. Cost of Goods Sold Finished Goods Work-in-Process Actual Direct Balance Before Actual Machine- Hours 60,000 Manufacturing Labour-Hours 80,100 Proration, 9,000 11,000 End of Year 22,000,000 2,700,000 15,900 26,500 7,300,000 1. Compute the budgeted overhead rates for the year in the Machining and Assembly Departments. 2. Compute the under- or overallocated overhead in each department for the year. Dispose of the under- or overallocated amount in each department using: Immediate write-off to Cost of Goods Sold. Proration based on ending balances (before proration) in Cost of Goods Sold, Finished Goods, and Work-in-Process. Proration based on the allocated overhead amount (before proration) in the ending balances of Cost of Goods Sold, Finished Goods, and Work-in-Process. 3. Which disposition method is preferred in requirement 2? Explain. Print Done -
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