Brighton Services repairs locomotive engines. It employs 100 full-time workers at $20 per hour. Despite operating at capacity, last year's performance was a great disappointment to the managers. In total, 10 jobs were accepted and completed, incurring the following total costs.

Direct materials	$	1,036,400
Direct labor		4,200,000
Manufacturing overhead		1,050,000

Of the $1,050,000 manufacturing overhead, 30 percent was variable overhead and 70 percent was fixed.

This year, Brighton Services expects to operate at the same activity level as last year, and overhead costs and the wage rate are not expected to change. For the first quarter of this year, Brighton Services completed two jobs and was beginning the third (Job 103). The costs incurred follow.

Job	Direct Materials			Direct Labor
101	$	137,300		$	495,000
102		94,000			312,400
103		94,100			197,800
Total manufacturing overhead					271,300
Total marketing and administrative costs					113,000

You are a consultant associated with Lodi Consultants, which Brighton Services has asked for help. Lodi's senior partner has examined Brighton Services's accounts and has decided to divide actual factory overhead by job into fixed and variable portions as follows.

	Actual Manufacturing Overhead
	Variable		Fixed
101	$	30,000	$	104,100
102		27,600		88,300
103		4,700		16,600
	$	62,300	$	209,000

In the first quarter of this year, 30 percent of marketing and administrative cost was variable and 70 percent was fixed. You are told that Jobs 101 and 102 were sold for $852,000 and $552,000, respectively. All over- or underapplied overhead for the quarter is written off to Cost of Goods Sold.

Required:

a. Present in T-accounts the actual manufacturing cost flows for the three jobs in the first quarter of this year.

b. Using last year's overhead costs and direct labor-hours as this year's estimate, calculate predetermined overhead rates per direct labor-hour for variable and fixed overhead.

c. Present in T-accounts the normal manufacturing cost flows for the three jobs in the first quarter of this year. Use the overhead rates derived in requirement (b).

d. Calculate operating profit (loss) for the first quarter of this year under actual and normal costing systems. (These answers below may not be correct)

Beg. Bal. Materials Inventory 137,300 94,000 101: DM 94,100 101: DM Beg. Bal. Wages Payable 495,000 312,400 197.800 End, Bal 325,400 End. Bal. 1,005,200 Variable Manufacturing Overhead 30,000 27,600 4,700 Fixed Manufacturing Overhead 104,100 88,300 16,600 End. Bal. 62.300 End. Bal. 209,000 Finished Goods Inventory Work-in-Process Inventory 325,400 766,400 Beg. Bal. Beg. Bal. 1,005,200 522,300 Cost of Goods Sold 62,300 313,200 209,000 End. Bal End, Bal Cost of Goods Sold Beg. Bal. Finished Goods End. Bal. Predetermined Overhead Rate (Per Direct Labor-Hour) $ 1.50 EA Variable overhead rate Fixed overhead rate $ 3.50 Materials Inventory Wages Payable Beg. Bal. Beg. Bal. End. Ball End. Bal. Variable Manufacturing Overhead Fixed Manufacturing Overhead End. Bal End. Bal. Work-in-Process Inventory Finished Goods Inventory Beg. Bal. Beg. Bal. Cost of Goods Sold End. Bal. End. Bal Cost of Goods Sold Under-or Overapplied Overhead Beg. Bal. Beg. Bal. Finished Goods End. Bal End. Bal. Actual 2,300 $ Normal 30,450 Operating profit (loss) $