Constructo, Inc., is a manufacturer of furnishings for infants and children. The company uses a job order cost system and employs a full absorption accounting method for cost accumulation. Constructo's work-in-process inventory at April 30, Year 8, 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 25,000 250,000 $1,570,000 The company's finished goods inventory, which Constructo evaluates using the FIFO (first-in, first-out) method, consisted of five items: Accumulated Item Quantity and Unit Cost Cost Cribs 7.500 units @$64 each $ 480,000 Strollers 13,000 units @ $23 each 299,000 Carriages 11,200 units @ $102 each 1.142.400 Dressers 21,000 units @$55 each 1,155,000 Playpens 19,400 units @$35 each 679,000 $3,755,400 Constructo applies factory overhead on the basis of direct labor hours. The company's factory overhead budget for the fiscal year ending May 31, Year 8, 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 Constructo'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 May included the following: Raw Purchased Parts Materials Parts Additions $242,000 $396,000 Requisitions Job CBS102 51,000 104,000 Job PLP086 3,000 10,800 Job DRS 114 124,000 87,000 Job STRO77 (10,000 strollers) 62,000 81,000 Job CRG098 (5,000 carriages) 65,000 187,000 During the month of May, Constructo's factory payroll consisted of the following: Account 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 Listed below are the jobs that were completed and the unit sales for the month of May. Job No. Items Quantity Complete 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 4) Calculate the dollar amount related to the playpens in Constructo's finished goods inventory as of May 31, Year 8. The answer is $455,600 and it is based on 13,400 playpen units in ending Finished Goods. Show the work in calculating the amounts. Label all numbers. 5) Explain the proper accounting treatment for overapplied and underapplied overhead balances when using a job order cost system. How is the treatment different if the over/under amount is material? 6) Looking at Constructo Inc.'s costs and manufacturing activity, what advice would you offer them regarding their operations? Constructo, Inc., is a manufacturer of furnishings for infants and children. The company uses a job order cost system and employs a full absorption accounting method for cost accumulation. Constructo's work-in-process inventory at April 30, Year 8, 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 25,000 250,000 $1,570,000 The company's finished goods inventory, which Constructo evaluates using the FIFO (first-in, first-out) method, consisted of five items: Accumulated Item Quantity and Unit Cost Cost Cribs 7.500 units @$64 each $ 480,000 Strollers 13,000 units @ $23 each 299,000 Carriages 11,200 units @ $102 each 1.142.400 Dressers 21,000 units @$55 each 1,155,000 Playpens 19,400 units @$35 each 679,000 $3,755,400 Constructo applies factory overhead on the basis of direct labor hours. The company's factory overhead budget for the fiscal year ending May 31, Year 8, 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 Constructo'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 May included the following: Raw Purchased Parts Materials Parts Additions $242,000 $396,000 Requisitions Job CBS102 51,000 104,000 Job PLP086 3,000 10,800 Job DRS 114 124,000 87,000 Job STRO77 (10,000 strollers) 62,000 81,000 Job CRG098 (5,000 carriages) 65,000 187,000 During the month of May, Constructo's factory payroll consisted of the following: Account 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 Listed below are the jobs that were completed and the unit sales for the month of May. Job No. Items Quantity Complete 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 4) Calculate the dollar amount related to the playpens in Constructo's finished goods inventory as of May 31, Year 8. The answer is $455,600 and it is based on 13,400 playpen units in ending Finished Goods. Show the work in calculating the amounts. Label all numbers. 5) Explain the proper accounting treatment for overapplied and underapplied overhead balances when using a job order cost system. How is the treatment different if the over/under amount is material? 6) Looking at Constructo Inc.'s costs and manufacturing activity, what advice would you offer them regarding their operations