Zero 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 2012:

Budgeted manufacturing overhead costs		$4,875,000
Overhead allocation base		Machine hours
Budgeted machine-hours		75,000
Manufacturing overhead costs incurred		$5,125,000
Actual machine-hours		80,000
Machine-hours data and the ending balances (before proration of under- or overallocated overhead) are as follows
	Actual Machine-Hours		2012 End-of-Year Balance
Cost of Goods Sold	60,000		$8,500,000
Finished Goods Control	12,000		1,000,000
Work-in-Process Control	8,000		500,000

Requirement 

1. Compute the budgeted manufacturing overhead rate for2012.

Begin by selecting the formula you will use. Then, enter the amounts and calculate the rate. Compute the budgeted manufacturing overhead rate for 2012

2. Compute the under- or overallocated manufacturing overhead of Zero Radiator in 2012
Dispose of this amount using the following:

a. Write-off to Cost of Goods Sold

b. Proration based on the overhead allocated in 2012(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.

Answer rating: 100% (QA)

Budgeted manufacturing Overhead allocation rate 6500 per MH overhead cost Budgeted machine hours 487... View the full answer