Divine Bath Works is a leader in the bath fixtures industry, rising to prominence with the introduction of over-the-counter sinks. The following data pertain to September, the last month of Divine's fiscal year. Balance as of September 1 Type of Inventory IstoT $ 28,100 $124,320 $245,000 Materials (direct and indirect) Work in Process lb 00P.08 ud bed tort uoy amolnl cs ahvd Finished Goods 312 9C The Work in Process Inventory on 9/1 consisted of one job, Job X, for 700 units of Model 00, an oval, over-the-counter sink. The Finished Goods Inventory on 9/1 comprised the following: Model Number (description) 00 (Oval, over-the counter) RI (Round, in-the counter) OI (Oval, in-the counter) Quantity Cost per unit Total Cost 100 $320.00 $197.25 $298.00 $32,000 $78,900 $134,100 $245,000 400 450 Total Divine uses a "normal" costing system, combined with the FIFO inventory flow assumption, to cost its inventories. That is, Divine traces actual materials and labon costs to individual jobs. It allocates manufacturing overhead using a predetermined overhead rate computed at the start of the year. Divine allocates overhead using dire labor hours as the allocation basis (cost driver). Divine prepared the following annual overhead cost budget at the start of the present year. Budgeted amount $290,000 422,340 228,520 425,800 136,740 Overhead item Supplies Indirect Labor Supervision Depreciation Utilities 185,000 $21 Factory Rent Total $1,688,400 Divine also informs you that it had budgeted for 80,400 direct labor hours at the start of the year. As of September 1, the company had incurred 75,315 actual direct labor hours and spent $1,569,450 in actual overhead costs. we bought During September, Divine purchased $112,340 of direct materials and $26,430 of indirect materials. The following table shows the requisition of direct materials during September: Job number X. K L. Model 00 OI RO RI Description Oval, OTC Oval, in sink 500 $58,000 Round, OTC 200 H $24,000 Round, in sink Units 700 Direct Materials 700 $22,000 E $11,450 I= 1154 (B) Divine consumed $22,000 of indirect materials during September. Divine incurred the following labor costs during September. Item Indirect Labor Direct Labor Job Hours Amount $32,000 $34,560 $43,740 $29,365 $15,210 1,920 2,430 1,678 845 42287 6873 The following comprises actual overhead costs (other than supplies and indirect labor) incurred during the month of September. Cost Item Supervision Depreciation Utilities Factory rent Actual amount (for September) $18,400 $32,650 $ 8,900 $15,400 75 750 Finally, Divine completed all jobs except Job B during September. It also sold the following items during the month of September. Model 00 RI OI Units Sold 750 200 400 150 REQUIRED: 1. Compute the amount of under-over applied overhead for the month of September and the year ended September 30. (10 pts.) September: Year: 2. Compute the ending balance of the Work in Process Inventory account at 9/30: (5 pts.) 3. Calculate the ending balance of Finished Goods Inventory for each model at 9/30 (use FIFO method). (20 pts.) Model 00: Model RI: Model OI: Model RO: beortovo fsut 4. Prepare an Income Statement for the month ended 9/30 (Assume that Sales Revenue will be 25% greater than total Cost of Goods Sold, operating expenses are $20,000 and the company's income tax rate is 20%). (10 pts.)
