CUSTOM COST ACCOUNTING 15E
15th Edition
ISBN: 9781269831338
Author: Horngren
Publisher: PEARSON C
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Chapter 4, Problem 4.35E
Proration of
| Budgeted manufacturing overhead cost | $25,000 |
| Budgeted direct manufacturing labor cost | $250,000 |
| Actual manufacturing overhead cost | $117,000 |
| Actual direct manufacturing labor cost | $228,000 |
Inventory balances on December 31, 2017, were as follows:
| Account | Ending balance | 2017 direct manufacturing labor cost in ending balance |
| Work in process | $50,700 | $20,520 |
| Finished goods | 245,050 | 59,280 |
| Cost of goods sold | 549,250 | 148,200 |
- 1. Calculate the manufacturing overhead allocation rate.
Required
- 2. Compute the amount of under- or overallocated manufacturing overhead.
- 3. Calculate the ending balances in work in process, finished goods, and cost of goods sold if under- or overallocated manufacturing overhead is as follows:
- a. Written off to cost of goods sold
- b. Prorated based on ending balances (before proration) in each of the three accounts
- c. Prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts
- 4. Which method would you choose? Justify your answer.
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Chapter 4 Solutions
CUSTOM COST ACCOUNTING 15E
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