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Proration of overhead. (Z. lqbal, 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 following data are for 2009:
Budgeted manufacturing overhead costs Overhead allocation base Budgeted machine-hours Manufacturing overhead costs incur
Machine-hours data and the ending balances (before proration of under- or overallocated overhead) are as follows:
1. Compute the budgeted manufacturing overhead rate for 2009.
2. Compute the under- or overallocated manufacturing overhead of Zaf Radiator in 2009. Dispose of this amount using
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
c. Proration based on the overhead allocated in 2009 (before proration) 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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