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........................................................................80,000

Manufacturing overhead costs incurred........................................$4,900,000

Actual machine-hours..............................................................................75,000

Machine-hours data and the ending balances (before proration of under- or over allocated overhead) are as follows:

Required
1. Compute the budgeted manufacturing overhead rate for 2017.
2. Compute the under- or over allocated manufacturing overhead of Zaf 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 based 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.

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Cost of Goods Sold Finished Goods Control Work-in-Process Control Actual Machine-Hours 60,000 11,000 4,000 2017 End-of-Year Balance $8,000,000 1,250,000 750,000