Reference no: EM132649752

Luxury Yachts make yachts to customer order. It began business on 1/1/2014. It applies manufacturing overhead to production based upon labor hours. At the start of the year it expected to work 200,000 labor hours and expected to incur $12,000,000 in manufacturing overhead. In 2014 it started work on 2 jobs, one a batch of 20 of a standard model for a sailing instruction school, the other a batch of 4 highly customized yachts for a local billionaire. It finished and delivered the billionaire's order in the year after working a total of 50,000 labor hours on it. The direct material used for this order was $1,000,000. The sailing school's order was still incomplete at the end of the year. Direct Material of $2,500,000 and 160,000 direct labor hours had, however, been incurred. The actual manufacturing overhead incurred in the year was $12,400,000. The Direct labor rate is $30 per hour.

Required.

Question 1: Using normal job-order absorption costing calculate:

(i) Ending W-I-P Inventory

(ii) Unadjusted COGS

(iii) Under- or Over-applied Manufacturing Overhead