54. (Comprehensive) Young Stuff is a manufacturer of furnishings for infants and children. The company uses a job order cost system. Young Stuff’s Work in Process Inventory on April 30, 2002, consisted of the following jobs:

Job No. Items Units Accumulated Cost CBS102 Cribs 20,000 $ 900,000 PLP086 Playpens 15,000 420,000 DRS114 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 Total Cost Cribs 7,500 units @ $ 64 $ 480,000 Strollers 13,000 units @ $ 23 299,000 Carriages 11,200 units @ $102 1,142,400 Dressers 21,000 units @ $ 55 1,155,000 Playpens 19,400 units @ $ 35 679,000

$3,755,400 Young Stuff applies factory overhead on the basis of direct labor hours.

The company’s factory overhead budget for the year ending May 31, 2002, 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 Young Stuff’s 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:

The jobs that were completed in and the unit sales for May follow:
Job No. Items Quantity Completed CBS102 Cribs 20,000 PLP086 Playpens 15,000 STR077 Strollers 10,000 CRG098 Carriages 5,000 Items Quantity Shipped Cribs 17,500 Playpens 21,000 Strollers 14,000 Dressers 18,000 Carriages 6,000

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

b. Calculate the dollar balance in Young Stuff’s Work in Process Inventory account as of May 31, 2002.

c. Calculate the dollar amount related to the playpens in Young Stuff’s Finished Goods Inventory as of May 31, 2002.

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

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Additions Requisitions: Job #CBS102 Job #PLP086 Job #DRS114 Job # STR077 (10,000 strollers) Job #CRG098 (5,000 carriages) Raw Material Parts Purchased $242,000 $396,000 51,000 104,000 3,000 10,800 124,000 87,000 62,000 81,000 65,000 187,000 During May, Young Stuff's factory payroll consisted of the following: Job No. Hours Cost CBS102 12,000 $122,400 PLP086 4,400 43,200 DRS114 19,500 200,500 STR077 3,500 30,000 CRG098 14,000 138,000 Indirect 3,000 29,400 Supervision 57,600 $621,100