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 Base | machine-hours |
| Budgeted machine-hours | 75,000 |
| Manufacturing Overhead Costs Incurred | $ 5,125,000 |
| Actual machine-hours | 80,000 |
Machine-hours data and the ending balances? (beforeproration of? under- or overallocated? overhead) are as?follows:
| Actual Machine-Hours | 2017 End-of-Year Balance |
| Cost of Goods Sold | 60,000 | $ 8,500,000 |
| Finished Goods Control | 12,000 | 1,000,000 |
| Work-in-Process Control | 8,000 | 500,000 |
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. |
