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

Job No.		Description		Units		Accumulated Cost
CC723		Computer caddy		20,000		$ 900,000
CH291		Chair		15,000		431,000
PS812		Printer stand		25,000		250,000
Total						$1,581,000

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

Item		Quantity and Unit Cost		Accumulated Cost
Computer caddy		7,500 units @ $64 each		$ 480,000
Chair		19,400 units @ $35 each		679,000
Printer stand		21,000 units @ $55 each		1,155,000
Desk		11,200 units @ $102 each		1,142,400
Total				$ 3,456,400

At the end of November, the balance in CompuFurns 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.

Additions		Raw Materials		Purchased Parts
Purchases		$242,000		$396,000
Requisitions:
Job CC723		51,000		104,000
Job CH291		3,000		10,800
Job PS812		124,000		87,000
Job DS444 (5,000 desks)		65,000		187,000

CompuFurn applies manufacturing overhead on the basis of machine hours. The companys 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 firms estimated practical capacity. Through the first 11 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:

Account		Machine Hours		Labor Hours		Labor Cost
CC723		12,000		11,600		$122,400
CH291		4,400		3,600		43,200
PS812		19,500		14,300		200,500
DS444		14,000		12,500		138,000
Indirect labor				3,000		29,400
Supervision						57,600
Total		49,900		45,000		$591,100

The jobs completed in December and the unit sales for that month are as follows:

Job No.		Production Items		Quantity Completed		Item		Quantity Shipped
CC723		Computer caddy		20,000		Computer caddy		17,500
CH291		Chair		15,000		Chair		21,000
DS444		Desks		5,000		Printer stand		18,000
						Desk		6,000

Required:

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

Calculate the balance in CompuFurn, Inc.s Work-in-Process Inventory account as of December 31.

Calculate the cost of the chairs in CompuFurn, Inc.s finished-goods Inventory as of December 31.

Actual manufacturing overhead incurred in December amounted to $252,000. Calculate CompuFurns overapplied or underapplied overhead for the year.

Explain two alternative accounting treatments for overapplied or underapplied overhead balances when using a job-order costing system.