Question

Divine Bath Works is a leader in the bath fixtures industry, rising to prominence with the introduction of over-the-counter sinks. The following data pertain to September, the last month of Divine's fiscal year. Balance as of September 1 Type of Inventory IstoT $ 28,100 $124,320 $245,000 Materials (direct and indirect) Work in Process lb 00P.08 ud bed tort uoy amolnl cs ahvd Finished Goods 312 9C The Work in Process Inventory on 9/1 consisted of one job, Job X, for 700 units of Model 00, an oval, over-the-counter sink. The Finished Goods Inventory on 9/1 comprised the following: Model Number (description) 00 (Oval, over-the counter) RI (Round, in-the counter) OI (Oval, in-the counter) Quantity Cost per unit Total Cost 100 $320.00 $197.25 $298.00 $32,000 $78,900 $134,100 $245,000 400 450 Total Divine uses a "normal" costing system, combined with the FIFO inventory flow assumption, to cost its inventories. That is, Divine traces actual materials and labon costs to individual jobs. It allocates manufacturing overhead using a predetermined overhead rate computed at the start of the year. Divine allocates overhead using dire labor hours as the allocation basis (cost driver).

Answer 1

1). For September = $14,983
For the year        = $27,148
Worksheet
Under/overapplied overhead = applied overhead – actual overhead.
Till September:
Actual overhead	$1,569,450
Applied overhead	$1,581,615	$21/labor hour × 75,315 labor hours
Overapplied OH	$12,165
Item	Amount
Opening balance (September 1)	-12,165
Supplies	$22,000
Indirect labor	32,000
Supervision	18,400
Depreciation	32,650
Utilities	8,900
Factory rent	15,400
Applied overhead	-144,333
Ending balance	($27,148)
overapplied overhead of $27,148 as of September 30.
	Actual overhead for September	$129,350
	Applied overhead for September	$144,333
	Overapplied overhead	($14,983)
the total overapplied overhead is $27,148 = $12,165 + $14,983.
2). Ending balance of WIP -Sepember	$44,405
Job number	X	K	L	B	Total
Model	OO	OI	RO	RI
Description	Oval, OTC	Oval,	Round, OTC	Round,
		in sink		in sink
Units	700	500	200	700
Labor hours	1,920	2,430	1,678	845	6,873
Beginning Balance	$124,320				$124,320
Raw materials	22,000	$58,000	$24,000	$11,450	115,450
Labor	34,560	43,740	29,365	15,210	122,875
Overhead1	40,320	51,030	35,238	17,745	144,333
Total	221,200	152,770	88,603	44,405
Cost per unit	$316	$305.54	$443.02	NA
1Overhead rate of $21 per labor hour x number of labor hours.
Summary
Beginning Balance – WIP	$124,320
Raw materials	115,450
Labor	122,875
Overhead	144,333
Completed: X	-221,200
Completed: K	-152,770
Completed: L	-88,603
Ending balance – WIP	$44,405
3)
Model OO	15,800
Model RI	39,450
Model OI	167,670
Model RO	22,150.75
Model	OO	RI	OI	RO	Total
Units
Beginning inventory	100	400	450	0
Added this period	700	0	500	200
Sold in September	750	200	400	150
Ending inventory	50	200	550	50
Beginning Balance	$32,000	$78,900	$134,100	0	$245,000
From WIP	221,200	0	152,770	88,603	$462,573
Sold (see detail)	237,400	39,450	119,200	66,452.25	$462,502
Ending inventory	15,800	39,450	167,670	22,150.75	$245,071
4).
Income statement is prepared with the data provided
Income Statement
Sales Revenue	25% higher than of COGS	$578,128
Cost of Goods sold		$462,502
Gross Profit		$115,626
Operating expenses		$20,000
		$95,626
Tax Expenses	20%	$19,125
Net Profit		$76,500