Divine Bath Works is a leader in the bath fixtures industry

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. Type of Inventory Balance as of Septeniber Materials (direct and indirect) Work in Process Finished Goods $28,100 $124,320 $245,000 The Work in Process Inventory on 9/1 consisted of one job, Job X, for 700 units of Model OO, an oval, over-the-counter sink. The Finished Goods Inventory on 9/1 comprised the following: Cost per unit Total Cost Model Number (description) 00 (Oval, over-the counter) RI (Round, in-the counter) OI (Oval, in-the counter) Quantity 100 400 450 $32,000 $78,900 $134,100 1815-251$245,000 $320.00 $197.25 $298.00 Total 95o 970 Divine uses a \"normal\" costing system, combined with the FIFO inventory flow assumption, to cost its inventories. That is, Divine traces actual materials and labor costs to individual jobs. It allocates manufacturing overhead using a predetermined overhead rate computed at the start of the year. Divine allocates overhead using direct lahor hours as the allocation basis (cost driver).

Solution

1.

Over applied overheads:

For September = $14,983

For the year = $27,148

2.

Balance of work in process as at September 30 :$44,405.00

Working:

3.

Working:

4.

Workings:
		Upto	September	For the
		August		Year
Predetermined overhead rate *	A	21	21	21
Actual direct labor hours **	B	75315	6873	82188
Overheads applied (A X B)	C	1581615	144333	1725948
Actual overheads incured ***	D	1569450	129350	1698800
Over / (Under) applied overhead (C - D)	E	12165	14983	27148
Predetermined overhead rate *
Budgeted overhads for the year	A	1688400
Budgeted direct labor hours for the year	B	80400
Predetermined overhead rate (A / B)	C	21
For September
(i) Direct labor hours *
Job X		1920
Job K		2430
Job L		1678
Job B		845
Total		6873
(ii) Actual overheads incurred *
Indirect material		22000
Indirect labor		32000
Supervision		18400
Depreciation		32650
Utilities		8900
Factory rent		15400
Total		129350