CompuFurn, Inc. manufactures furniture for computer work stations. CompuFurn uses a job- order costing system and employs absorption costing. CompuFurn’s work-in-process inventory on November 30 consisted of the following jobs.

On November 30 the company’s finished-goods inventory which is evaluated using the first in first out (FIFO) method consisted of four items.

At the end of November, the balance in CompuFurn’s Materials Inventory account, which includes both raw materials and purchased parts, was $668,000. Additions to and requisitions from the materials inventory during the month of December included the following.

CompuFurn applies manufacturing overhead on the basis of machine hours. The company’s manufacturing overhead budget for the year totaled 4,500,000. The company planned to use 900,000 machine hours during this period, which is the firm’s estimated practical capacity. Through the first II months of the year, a total of 830,000 machine hours were used, and actual manufacturing overhead amounted to $4,140,000.

During the month of December, machine hours and labor hours consisted of the following:
The jobs completed in December and the unit sales for that month are as follows:

Required:
1. Describe when it is appropriate for a company to use a job-order costing system.
2, Calculate the balance in CompuFurn, Inc.’s Work-in-Process Inventory account as of December 31.
3. Calculate the cost of the chairs in CompuFurn, Inc.’s finished-goods Inventory as of December 3l.
4. Actual manufacturing overhead incurred in December amounted to $252,000. Calculate CompuFurn’s over applied or under applied overhead for the year.
5. Explain two alternative accounting treatments for over applied or under applied overhead balances when using a job-order costingsystem.

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Job No. CC723... CH291 PS812..P Total.... Description Units Accumulated Cost Computer caddy 20,000 15,000 Printer stand.25,000 900,000 431,000 260,000 $1,581,000 Chair1 25,000 Item Quantity and Unit Cost Accumulated Cost Computer caddy har Printer stand Desk 7,500 units $64 each 480,000 19,400 units$35 eac 21,000 units$55 each 11,200 units $102 each.... 679,000 ,155,000 1,142,400 Total 3,456.400 Additions Additions .. Requisitions: Job CC723 Job CH291 Job PS812 Job DS444 (5,000 desks) Raw Materials Purchased Parts $242,00 $396,000 51,000.. 3,000 104,000 10,800 87,000 187,000 124,000 65,000 Labor Cost Account CC723 CH291 PS812... DS444 Indirect labor Superisioln Total Machine Hours Labor Hours 12,000.... 4,400 19,500 $122,400 11,600 3,600... 14,300 ....1 200,500 12,500 3,000 … w.138,000 29,400 l 14,000 .. 57,600 49.900 45,000 3051.100 Quantity Shipped Quantity Job No. Production Items Completed Item CC723Computer caddy20,000 Computer caddy.,500 21,000 18,000 6,000 CH291.C DS444... Desks 15.000 Chai 5,000 Printer stand Chair Desk