A Level 5 leader __________.

Technology is helpful for routine but complex decisions

Indicate whether the statement is true or false.

Proration of overhead

The Ride-On-Wave 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 2014: Budgeted manufacturing overhead cost $125,000 Budgeted direct manufacturing labor cost $250,000 Actual manufacturing overhead cost $117,000 Actual direct manufacturing labor cost $228,000 Inventory balances on December 31, 2014, were as follows: 2014 direct manufacturing Account Ending balance labor cost in ending balance Work in process $ 50,700 $ 20,520 Finished goods 245,050 59,280 Cost of goods sold 549,250 148,200 Required: 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 c. Prorated based on the overhead allocated in 2014 in the ending balances (before proration) in each of the three accounts 4. Which method would you choose? Justify your answer.