Constructo Inc: Under or Overapplied Overhead

Constructo Inc. is a manufacturer of furnishings for infants and children. The company uses a job cost system and employs a full absorption accounting method for cost accumulation. Constructo's work-in-process inventory at April 30, 2001 consisted of the following jobs.

Job No.ItemsUnitsAccumulated CostCBS102Cribs20,000$900,000PLP086Playpens15,000420,000DRS114Dressers25,000250,000$1,570,000

The company's finished goods inventory, which Constructo evaluates using the FIFO (First-in, first-out) method, consisted of five items.

ItemQuantity and Unit CostAccumulated CostCribs7,500units @ $64each$480,000Strollers13,000units @ $23each299,000Carriages11,200units @ $102each1,142,400Dressers21,000units @ $55each1,155,000Playpens19,400units @ $35each679,000$3,755,400

Constructo applies factory overhead on the basis of direct labor hours. The company's factory overhead budget for the fiscal year ending May 31, 2001, totals $4,500,000, and the company plans to expend 600,000 direct labor hours during this period. Through the first eleven 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 Constructo's Materials Inventory account, which includes both raw materials and purchased parts, was $668,000. Additions to and requisitions from the materials inventory during the month of May included the following.

Raw MaterialsPurchased PartsAdditions$242,000$396,000Requisitions:Job CBS10251,000104,000Job PLP0863,00010,800Job DRS114124,00087,000Job STR077 (10,000 strollers)62,00081,000Job CRG098 (5,000 carriages)65,000187,000

During the month of May, Constructo's factory payroll consisted of the following.

AccountHoursCostCBS10212,000$122,400PLP0864,40043,200DRS11419,500200,500STR0773,50030,000CRG09814,000138,000Indirect3,00029,400Supervision57,600$621,100

Listed below are the jobs that were completed and the unit sales for the month of May.

Job No.ItemsQuantity CompleteCBS102Cribs20,000PLP086Playpens15,000STR077Strollers10,000CRG098Carriages5,000

ItemsQuantity ShippedCribs17,500Playpens21,000Strollers14,000Dressers18,000Carriages6,000

1. Calculate the dollar balance in Constructo's work-in-process inventory account as of May 31, 2001.
2. Calculate the dollar amount related to the playpens in Constructo's finished goods inventory as of May 31, 2001.