REVEL for Horngren's Cost Accounting: A Managerial Emphasis -- Access Card (16th Edition) (What's New in Accounting)
16th Edition
ISBN: 9780134789705
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 4, Problem 4.41P
Proration of
| Manufacturing overhead rate (fabrication department) | $12 per machine-hour |
| Manufacturing overhead rate (finishing department) | $20 per direct manuf. labor-hour |
| Machine-hours (fabrication department) for May | 3,200 machine-hours |
| Direct manuf. labor-hours (finishing department) for May | 1,800 labor-hours |
| Work-in-process inventory, May 31 | $60,000 |
| Finished-goods inventory, May 31 | $180,000 |
| Cost of goods sold, May | $360,000 |
Adventure Designs prorates under- and overallocated overhead monthly to work in process, finished goods, and cost of goods sold based on the ending balance in each account.
- 1. Calculate the amount of overhead allocated in the fabrication department and the finishing department in May.
Required
- 2. Calculate the amount of under- or overallocated overhead in each department and in total.
- 3. How much of the under- or overallocated overhead will be prorated to (a) work-in-process inventory (b) finished-goods inventory and (c) cost of goods sold based on the ending balance (before proration) in each of the three accounts? What will be the balance in work-in-process, finished-goods, and cost of goods sold after proration?
- 4. What would be the effect of writing off under- and overallocated overhead to cost of goods sold? Would it be reasonable for Adventure Designs to change to this simpler method?
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Chapter 4 Solutions
REVEL for Horngren's Cost Accounting: A Managerial Emphasis -- Access Card (16th Edition) (What's New in Accounting)
Ch. 4 - Define cost pool, cost tracing, cost allocation,...Ch. 4 - How does a job-costing system differ from a...Ch. 4 - Why might an advertising agency use job costing...Ch. 4 - Describe the seven steps in job costing.Ch. 4 - Give examples of two cost objects in companies...Ch. 4 - Describe three major source documents used in...Ch. 4 - What is the advantage of using computerized source...Ch. 4 - Give two reasons why most organizations use an...Ch. 4 - Distinguish between actual costing and normal...Ch. 4 - Describe two ways in which a house-construction...
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