(Comprehensive) Kids Krafts is a manufacturer of furnishings for infants and chil¬ dren. The company uses a job order cost system. Kids Krafts’ Work in Process Inventory on April 30, 1998, consisted of the following jobs:

Kids Krafts ; applies factory overhead on the basis of direct labor hours. The company’s factory overhead budget for the year ending May 31, 1998, totals $4,500,000, and the company plans to expend 600,000 direct labor hours during this period. Through the first 11 months of the year, a total of 555,000 direct labor hours were worked, and total factory overhead amounted to $4,273,500.
At the end of April, the balance in Kids Krafts’ Material Inventory account, which includes both raw material and purchased parts, was $668,000. Additions to and requisitions from the material inventory during May included the following:

a. Describe when it is appropriate for a company to use a job order costing system.

b. Calculate the dollar balance in Kids Krafts’ Work in Process Inventory ac¬ count as of May 31, 1998.

c. Calculate the dollar amount related to the playpens in Kids Krafts’ Finished Goods Inventory as of May 31, 1998.

d. Explain the treatment of underapplied or overapplied overhead when using a job order costing system.
(CMA adapted)LO1

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JOB NO. ITEMS UNITS ACCUMULATED COST CBS102 Cribs 20,000 $ 900,000 PLP086 DRS114 Playpens 15,000 420,000 Dressers 25,000 1,570,000 The company's finished goods inventory, carried on a FIFO basis, consists of five items: ITEM QUANTITY AND UNIT COST Cribs 7,500 units @ $ 64 Strollers 13,000 units @ $ 23 Carriages 11,200 units @ $102 Dressers 21,000 units @ $ 55 TOTAL COST $ 480,000 299,000 1,142,400 1,155,000 Playpens 19,400 units @ $ 35 679,000 $3,755,400