Ti-Enne Srl uses a normal costing system with a single manufacturing overhead cost pool and machine-hours as
Question:
Ti-Enne Srl uses a normal costing system with a single manufacturing overhead cost pool and machine-hours as the allocation base. The following data are for 2023:
Machine-hours data and the closing balances (before proration of underallocated or overallocated overhead) are as follows:
Required 1 Calculate the budgeted manufacturing overhead rate for 2023.
2 Calculate the under- or overallocated manufacturing overhead of Ti-Enne in 2023. Prorate this under- or overallocated amount using:
a Immediate write-off to Cost of Goods Sold b Proration based on closing balances (before proration) in Work in Progress, Finished Goods and Cost of Goods Sold c Proration based on the allocated overhead amount (before proration) in the closing balances of Work in Progress, Finished Goods and Cost of Goods Sold.
3 Which proration method do you prefer in requirement 2? Explain.
Step by Step Answer:
Management And Cost Accounting
ISBN: 9781292436029
8th Edition
Authors: Alnoor Bhimani, Srikant Datar, Charles Horngren, Madhav Rajan