Haley costs. Corporation manufactures custom cabinets for kitchens. It uses a normal-costing system with two direct cost categories-direct materials and direct manufacturing labor-and one indirect-cost pool, manufacturing overhead View the manufacturing overhead costs information for 2020. View the other information available as of December 31, 2020. Requirement Calculate the underallocated or overallocated manufacturing overhead at the end of 2020 and prorate it to Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold accounts based on the allocated manufacturing overhead in each account balance using normal costing. Begin by calculating the budgeted indirect cost rate. Identify the formula and then calculate the rate. (Assume the cost allocation base is direct labor hours.) Budgeted indirect cost rate Information Account Account Balance (Before Proration) Work-in-process control $ Finished goods control $ Cost of goods sold Total $ $ 35,000 65,000 1,700,000 1,800,000 Actual Direct Manufacturing Labor-Hours 896 1,344 25,760 28,000 - X Manufacturing Overhead Costs Budgeted manufacturing overhead costs Budgeted direct manufacturing labor hours Actual manufacturing overhead costs Actual direct manufacturing labor-hours Print Done $ $ 1,116,000 31,000 hours 1,288,000 28,000 hours

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter6: Process Costing

Section: Chapter Questions

Problem 8CE: Gunnison Company had the following equivalent units schedule and cost information for its Sewing...

See similar textbooks

Related questions

Concept explainers

Topic Video

Question

Haley Corporation manufactures custom cabinets for kitchens. It uses a normal-costing system with two direct cost categories-direct materials and direct manufacturing labor and one indirect-cost pool, manufacturing overhead
costs.
View the manufacturing overhead costs information for 2020.
View the other information available as of December 31, 2020.
Requirement
Calculate the underallocated or overallocated manufacturing overhead at the end of 2020 and prorate it to Work-in-Process Control, Finished Goods Control, and Cost of Goods Sold accounts based on the allocated manufacturing
overhead in each account balance using normal costing.
Begin by calculating the budgeted indirect cost rate. Identify the formula and then calculate the rate. (Assume the cost allocation base is direct labor hours.)
Budgeted indirect cost
rate
Information
Account
Work-in-process control
Finished goods control
Cost of goods sold
Total
Account Balance
(Before Proration)
GA
$
GAGA
35,000
65,000
1,700,000
1,800,000
Actual Direct
Manufacturing
Labor-Hours
896
1,344
25,760
28,000
X
Manufacturing Overhead Costs
Budgeted manufacturing overhead costs
Budgeted direct manufacturing labor hours
Actual manufacturing overhead costs
Actual direct manufacturing labor-hours
Print
Done
$
1,116,000
31,000 hours
1,288,000
28,000 hours

Expert Solution

Step 1

$B u d g e t e d i n d i r e c t \cos t r a t e = \frac{B u d g e t e d m a n u f a c t u r i n g o v e r h e a d \cos t s}{B u d g e t e d d i r e c t m a n u f a c t u r i n g l a b o r h o u r s}$

$\begin{array}{rcl} M a n u f a c t u r i n g o v e r h e a d a l l o c a t e d d u r i n g t h e y e a r & = & A c t u a l d i r e c t m a n u f a c t u r i n g l a b o r h o u r s \times B u d g e t e d i n d i r e c t \cos t r a t e \end{array}$

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.