MNC provides customized engineering services to large manufacturing companies and uses a job-order costing system. The system provided the following information:

MNC purchases materials as needed and consumes them during the accounting period. Therefore, it does not need to maintain a materials inventory account. The payroll amount includes salaries/wages paid to professional (direct) labour as well as indirect labour. Overhead is allocated to jobs using a predetermined overhead allocation rate based on professional labour costs computed at the beginning of the year. For 2016, MNC estimated its professional labour and overhead amounts to be $3 million and $960,000 respectively.

Required:

1. Compute the predetermined overhead allocation rate for the year.

2. Compute the following amounts for the month of July:

a. Cost of jobs completed.

b. Gross profit.

c. Net income.

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June 30, 2016 July 31, 2016 Inventories: $ 34,600 Jobs in process $22,800 Information about July: Materials purchases 50,000 Payroll 970,000 Actual overhead incurred: Supplies 6,000 Indirect labour 170,000 Other overhead costs 120,000 Selling & administration 640,000 Sales 2,325,000