Reference no: EM132474428

Point 1: Mapleton Corporation builds sailboats. On January 1, 2019, the company had the following account balances: $48,000 for both cash and common stock. Boat 25 was started on February 10 and finished on May 31. To build the boat, Mapleton had incurred cash costs of $8,640 for labor and $7,500 for materials. During the same period, Mapleton paid $11,160 cash for actual manufacturing overhead costs. The company expects to incur $210,600 of indirect overhead cost during 2019. The overhead is allocated to jobs based on direct labor cost. The expected total labor cost for the year is $162,000.

Point 2: Mapleton uses a just-in-time inventory management system. Consequently, it does not have raw materials inventory. Raw materials purchases are recorded directly in the Work in Process Inventory account.

Required

Question 1: If Mapleton desires to earn a profit equal to 20 percent of cost, for what price should it sell the boat?

Question 2: If the boat is not sold by year-end, what amount would appear in the Work in Process Inventory and Finished Goods Inventory on the balance sheet for Boat 25?

Question 3: Is the amount of inventory you calculated in Requirement c the actual or the estimated cost of the boat?