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4-39 Proration of overhead. (Z. Iqbal, adapted) The Zaf Radiator Company uses a normal-costing system...

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4-39 Proration of overhead. (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 fol- lowing 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 overallocated overhead) are as follows: 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 1. Compute the budgeted manufacturing overhead rate for 2017. 2. Compute the under- or overallocated 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 - Durat 3. Which method do you prefer in requirement 2? Explain

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