90.2K

Verified Solution

Link Copied!

The Row-On-Water Company (ROW) produces a line of non-motorized boats. ROW uses a normal-costing system and allocates manufacturing overhead using direct manufacturing labor cost. The following data are for 2017 Click the icon to view the data.) Inventory balances on December 31, 2017 were as follows: C ick the icon to view he account balances. Read the requirements Requirement 1. Calculate the manufacturing overhead allocation rate. ldentify the formula and calculate the manufacturing overhead allocation rate. (Enter the result as a whole number.) Budgeted manufacturing overhead Budgeted cost allocation base Overhead allocation rate 135,000 225,000 60 % of DL costs Requirement 2. Compute the amount of under-or overallocated manufacturing overhead Identify the formula and calculate the under- or manufacturing overallocated overhead. (Use parentheses or a minus sign to report overhead overallocated.) Actual manufacturing overhead Allocated manufacturing overheadUnderallocated (overallocated) 128,000 132,000 (4,000) Requirement 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. (a.) Calculate the ending balances in work in process, finished goods and cost of goods sold if under-or overallocated manufacturing overhead is written off to cost of goods sold Account Work in process S Finished goods S Cost of goods sold (b.) Begin by identifying the formula and calculating the adjustment to each account assuming under- or overallocated manufacturing overhead is prorated based on ending balances (before proration) in each of the Ending Balance 51,000 238,000 557,000 three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) Proportion (decimal) x (Over-) Underallocated Overhead Adjustment (b.) Begin by identifying the formula and calculating the adjustment to each account assuming under- or overallocated manufacturing overhead is prorated based on ending balances (before proration) in each of the three accounts. (Use a minus sign or parentheses to show overallocated amounts and adjustments to be subtracted.) Proportion (decimal) x (Over-) Underallocated OverheadAdjustment WIP FG CGS Budgeted manufacturing overhead cost Budgeted direct manufacturing labor cost Actual manufacturing overhead cost Actual direct manufacturing labor cost $ 135,000 $ 225,000 $ 128,000 220,000 1. Calculate the manufacturing overhead allocation rate 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 Prorated based on the overhead allocated in 2017 in the ending balances (before proration) in each of the three accounts c. 4. Which method would you choose? Justify your

Answer & Explanation Solved by verified expert

See Answer