4-30. Poration 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 2011: 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, 2011, were as follows: Account & Ending balance & }(c) 2011 direct manufacturing 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.

## Step 1: Calculate the Manufacturing Overhead Allocation Rate### The manufacturing overhead allocation rate is calculated using the budgeted figures. It is determined by dividing the budgeted manufacturing overhead cost by the budgeted direct manufacturing labor cost. The formula is: Substituting the given values: This means that for every dollar of direct manufacturing labor cost, Substituting the given values: ## Step 3: Compare Actual and Allocated Manufacturing Overhead### The actual manufacturing overhead cost is compared with the allocated manufacturing overhead to determine any over- or under-applied overhead:- **Actual Manufacturing Overhead Cost**: $117,000- **Allocated Manufacturing Overhead**: Since the actual overhead is greater than the allocated overhead, there is an under-applied overhead of $3,000.