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The Zef Radiator Company uses a? normal-costing system with a single manufacturing overhead cost pool and?...

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Question

Accounting

The Zef Radiator Company uses a? normal-costing systemwith a single manufacturing overhead cost pool and? machine-hoursas the? cost-allocation base. The following data are for2017?:

Budgeted Manufacturing Overhead Costs$ 4,875,000
Overhead Allocation Basemachine-hours
Budgeted machine-hours75,000
Manufacturing Overhead Costs Incurred$ 5,125,000
Actual machine-hours80,000

Machine-hours data and the ending balances? (beforeproration of? under- or overallocated? overhead) are as?follows:

Actual Machine-Hours2017 End-of-Year Balance
Cost of Goods Sold60,000$ 8,500,000
Finished Goods Control12,0001,000,000
Work-in-Process Control8,000500,000

Question:

1.

Compute the budgeted manufacturing overhead ratefor 2017.

2.

Compute the? under- or overallocated manufacturingoverhead of Zef 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 GoodsSold

c.

Proration based on the overhead allocated in 2017 (beforeproration) 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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