IvanhoeProducts Company uses a job order cost system. For a number of months, there has been an ongoing rift between the sales department and the production department concerning a special-order product, TC-1. TC-1 is a seasonal product that is manufactured in batches of1,000units. TC-1 is sold at cost plus a markup of 40% of cost.

The sales department is unhappy because fluctuating unit production costs significantly affect selling prices. Sales personnel complain that this has caused excessive customer complaints and the loss of considerable orders for TC-1.

The production department maintains that each job order must be fully costed on the basis of the costs incurred during the period in which the goods are produced. Production personnel maintain that the only real solution is for the sales department to increase sales in the slack periods.

HelenDonald, president of the company, asks you as the company accountant to collect quarterly data for the past year on TC-1. From the cost accounting system, you accumulate the following production quantity and cost data.

Quarter

Costs1

2

3

4

Direct materials

$80,000$300,000$60,000$360,000Direct labor

40,000150,00030,000180,000Manufacturing overhead

104,000153,00087,000216,000Total$224,000$603,000$177,000$756,000Production in batches

415318Unit cost (per batch)

$56,000$40,200$59,000$42,000

(c)

Restate the quarterly data by applying overhead as a set rate per batch.

Quarter

Costs1

2

3

4

Direct materials

$

enter a dollar amount

$

enter a dollar amount

$

enter a dollar amount

$

enter a dollar amount

Direct labor

enter a dollar amount

enter a dollar amount

enter a dollar amount

enter a dollar amount

Manufacturing overhead Applied

enter a dollar amount

enter a dollar amount

enter a dollar amount

enter a dollar amount

Total$

enter a total amount

$

enter a total amount

$

enter a total amount

$

enter a total amount

Production in batches

enter a number

enter a number

enter a number

enter a number

Unit cost (per batch)

$

enter a dollar amount

$

enter a dollar amount

$

enter a dollar amount

$

enter a dollar amount

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