Cruising Boats Company produces and sells customised cruising boats. On 1st September, there were two jobs in process, Jobs 1 and 2. Jobs 3, 4 and 5 were started during the month of September. Information about costs added during the month of September for each job are below: Job 1 Job 2 Job 3 Job 4 Job 5 1st September Balance $80,000 $40,000 $0 Direct materials $200,000 $300,000 $400,000 $500,000 $600,000 Direct labour $100,000 $150,000 $200,000 $250,000 $300,000 $0 $0 Overhead is applied to production at a rate of 50% of direct labour cost. Jobs 1, 2 and 5 were completed and sold on 30th September. Each job is sold at full-absorption manufacturing cost plus 120% mark-up. Selling and administrative costs for the month of September were $60,000. Required: 1. Calculate the amount of overhead applied to each job during September, and the total cost of each job. 2. Determine the total applied overhead for the company. If the actual overhead for September was $600,000, calculate the over-applied or under-applied overhead for September 3. Should the company use applied (budgeted) overhead or actual overhead to account for the cost of manufacturing overheads for jobs that are work-in-process? Provide detailed explanations. 4. Calculate the ending work-in-process inventory balance for the company as of 30th September 5. Calculate the unadjusted and adjusted cost of goods sold for September. 6. Prepare an income statement for Cruising Boats Company for the month of September using the adjusted cost of goods sold amount. Cruising Boats Company produces and sells customised cruising boats. On 1st September, there were two jobs in process, Jobs 1 and 2. Jobs 3, 4 and 5 were started during the month of September. Information about costs added during the month of September for each job are below: Job 1 Job 2 Job 3 Job 4 Job 5 1st September Balance $80,000 $40,000 $0 Direct materials $200,000 $300,000 $400,000 $500,000 $600,000 Direct labour $100,000 $150,000 $200,000 $250,000 $300,000 $0 $0 Overhead is applied to production at a rate of 50% of direct labour cost. Jobs 1, 2 and 5 were completed and sold on 30th September. Each job is sold at full-absorption manufacturing cost plus 120% mark-up. Selling and administrative costs for the month of September were $60,000. Required: 1. Calculate the amount of overhead applied to each job during September, and the total cost of each job. 2. Determine the total applied overhead for the company. If the actual overhead for September was $600,000, calculate the over-applied or under-applied overhead for September 3. Should the company use applied (budgeted) overhead or actual overhead to account for the cost of manufacturing overheads for jobs that are work-in-process? Provide detailed explanations. 4. Calculate the ending work-in-process inventory balance for the company as of 30th September 5. Calculate the unadjusted and adjusted cost of goods sold for September. 6. Prepare an income statement for Cruising Boats Company for the month of September using the adjusted cost of goods sold amount
