Pip Squeaks Inc. is a manufacturer of furnishings for infants and children. The company uses a job order cost system. Pip Squeaks€™ Work in Process Inventory on April 30, 2010, consisted of the following jobs:

The company€™s Finished Goods Inventory, carried on a FIFO (first-in, first-out) basis, consists of five items:

Pip Squeaks applies factory overhead on the basis of direct labor hours. The company€™s factory overhead budget for the fiscal year ending May 31, 2010, totaled $4,500,000, and the company planned to work 600,000 direct labor hours during this year. The rough 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 Pip Squeaks€™ Raw Material Inventory account, which includes both raw material and purchased parts, was $668,000. Additions to and requisitions from the material inventory during May included the following:

During May, Pip Squeaks€™ factory payroll consisted of the following:

The jobs that were completed in May and the unit sales for May are as follows:

Items Quantity Shipped
Cribs ....... 17,500
Playpens .... 21,000
Strollers ..... 14,000
Dressers ..... 18,000
Carriages ..... 6,000
a. Describe when it is appropriate for a company to use a job order costing system.
b. Calculate the dollar balance in Pip Squeaks€™ Work in Process Inventory account as of May 31, 2010.
c. Calculate the dollar amount related to the playpens in Pip Squeaks€™ Finished Goods Inventory as of May 31, 2010.
d. Explain the treatment of underapplied or overapplied overhead when using a job order costingsystem.

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ob No. CBS102 PLP086 DRS114 Items Cribs Playpens Dressers Units 20,000 15,000 25,000 Accumulated Cost S 900,000 420,000 1,570,000 Total Item Cribs Strollers Carriages Dressers Playpens Quantity and Unit Cost 7,500 units X $64 13,000 units X $23 11,200 units x $102 21,000 units X $55 19,400 units x $35 Cost S 480,000 299,000 1,142,400 1,155,000 679,000 53,755400 Total Raw Material Parts Purchased Additions $242,000 $396,000 Requisitions: Job WCBS102 Job #PLP086 Job #DRSI 14 Job \STR077 (10,000 strollers) Job #CRG098 (5,000 carriages) 51,000 3,000 124,000 62,000 65,000 104,000 0,800 87,000 81,000 187,000 Job No. CBS102 PLP086 DRS114 STR077 CRG098 Indirect Supervisiorn Hours 12,000 4,400 19,500 3,500 14,000 3,000 Cost $122,400 43,200 200,500 30,000 138,000 29,400 Total $621 100 Job No. CBS102 PLPO86 STRO77 CRG098 ltems Cribs Playpens Strollers Carriages Quantity Completed 20,000 15,000 0,000 5,000