ABC uses normal and job order costing. ABC had two jobs in process at the start of September: job number 59 ($13,600) and job number 60 ($21,600). ABC applies manufacturing overhead on the basis of machine hours (MH). The budgeted overhead and machine activity level for the year were anticipated to be $480,000 and 19,200 MH respectively. ABC worked on four jobs during September. The direct materials used, direct labour incurred, and machine hours consumed during September were as shown in the table below: Job number Direct materials Direct labour Machine hours (MH) 960 59 $9,200 $12,000 60 $18,000 560 61 62 $14,400 $6,400 $6,000 $6,000 1,600 400 Budgeted and actual direct labour rate is $10.00 and $12.00 per hour respectively. Manufacturing overhead incurred for September are as follows: depreciation ($12,000), indirect labour ($16,000), indirect materials used ($18,000) and other factory expenses ($9,200). ABC paid cash for all overhead expenses. Manufacturing overhead variance is closed on a monthly basis by proration to work in process, finished goods and cost of goods sold. During September, ABC completed job numbers, 59, 60 and 61. Job number 60 was sold on credit for a gross profit of $13,800. Required: (ii) (a) Compute ABC's predetermined overhead rate. (6) Prepare journal entries (to describe the flow of production-related costs) for September to record the following: (i) Manufacturing overhead incurred. Application of manufacturing overhead to production. (iii) Completion of Job number 59, 60 and 61. (c) Compute the costs of jobs still in production and costs in finished goods inventory at the end of September. (d) Determine the under/over-applied manufacturing overhead for September. (e) Calculate the amounts to be charged to work in process, finished goods inventory and cost of goods sold at the end of September in order to close off the manufacturing overhead variance. (f) The CEO is concerned about the impact of the manufacturing overhead variance on net profit. He believes that closing the overhead variance only to cost of goods sold will minimise the impact on net profit for September. Is he correct? Explain