VYR$3$: VYR has two large public park projects in one of the cities it serves, which need to be provided with comprehensive irrigation this month. Job OP J$57$ and job OP K$52$ involve $15$ hectares of land with gardens and natural grass fields that will require special sprinklers to meet the project specifications. Using a job order costing system to produce these parts, the following events occurred during March $2021.$

Production required direct materials to the company's inventory warehouse on the following dates; On March $2,$ requisition No$.01,$ for $$5,061$; On March $8,$ requisition No$.03,$ for $$1,059$; and on March $14,$ requisition No$.03$ for $$3,459.$ In each case, two$-$thirds $(2/3)$ of these materials were for OP J$57$ and the remainder for OP K$52.$

Six time cards were issued for these two projects for a total of $18$ hours of work. All workers were paid $$165$ per hour. The time cards were dated March $3,$ March $9,$ and March $15.$ On each of those days, $6$ hours of work were spent on these jobs, two$-$thirds $(2/3)$ for OP J$57$ and the remainder for OP K$52.$

The default CIF rate is based on machine hours. The budgeted usage for machine hours for the year is $2,112$ hours, and the budgeted CIF is $$840,576$ for the year. Workers used the machines on the OP K$52$ and OP J$57$ projects on March $3,9$ and $15.$ Six machine hours were used for the OP K$52$ project $(2$ each day$),$ and $8\mathrm{.}5$ machine hours were used for the OP J$57$ project $(2\mathrm{.}5$ on the first day and $3$ hours on each of the other days$).$ Both special orders were completed on March $15,$ producing $237$ sprinklers for OP J$57$ and $142$ sprinklers for OP K$52.$

The company has the following information on transactions carried out during this period of time:

March $2$ $$3,000$ of indirect materials are sent to production.

March $12$ Salaries for indirect labor are paid in the amount of $$650.$

March $13$ Factory water bill of $$95$ was paid.

March $18$ The factory's energy bill of $$280$ was paid.

March $21$ The factory property tax is paid in the amount of $$1,240$

March $23$ Factory maintenance service paid for $$120$

March $31$ Factory insurance is paid for $$880$ and factory depreciation amounted to $$1650$

Instructions

To prepare cost sheets for job order number OP J$57$ and job number OP K$52.$ Determine the total cost of each order. $($The unit cost should be rounded to one decimal place$).$

b$.$ Assuming that during the month only these two orders were produced; Determine whether manufacturing indirect costs were under or over applied.

c$.$ Why did VYR choose machine hours as the basis for applying CIF instead of direct labor cost? What would be the basis that VYR would choose to apply the CIF in the irrigation system installation work and why?

d$.$ If the company wants to obtain a gross margin of $65\%,$ what should be the sales price that it should charge the customer in each case?