Altons Arts does customized, hand-crafted memorabilia for hotels, in which each batch of

souvenirs is a job. The company uses a perpetual inventory system and has a highly labour-intensive

production process, so it assigns manufacturing overhead based on direct labour cost. Altons

predetermined overhead rate for 2017 was computed from the following data:

Total estimated factory overhead $2,400,000

Total estimated direct labour cost $2,000,000

The WIP account given below relates to the activities of Altons Arts for the month of April:
WIP Inventory A/C
April1 Bal. 15,000 Direct Materials Used 123,000 Direct Labour Incurred ? Manufacturing Overhead Applied ?	To finished goods

Additional data:

Total material requisitioned $153,000

Manufacturing Labour Costs incurred$163,500(75% represents direct labour)

Other manufacturing overheads incurred $94,275

Two jobs were completed with total costs of $183,000 and $105,000 respectively. They were sold to the hotel on account at a margin of 33 1/3% on sales.

Required:

(a) Compute Altons Arts predetermined manufacturing overhead rate for 2017. (2 marks)

(b) State the journal entries necessary to record the following transactions in the general journal.

(i) Total materials issued to production

(ii) Assign manufacturing labour to the appropriate accounts

(iii) Other manufacturing overhead incurred

(iv) Manufacturing overhead applied to production

(v) Move completed jobs to finished goods

(vi)Account for jobs completed and sold (8 marks)

(c) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account.

What is the balance on the account before performing end of period closing entries? Is

manufacturing overhead under- or over- absorbed? State the journal entries necessary to

dispose of the variance. Assume that the manufacturing overhead variance is immaterial.

(4 marks)

(d) What is the balance in the Cost of Goods Sold account after the adjustment? (2 marks)

(e) Compute Altons Arts gross profit earned on the jobs, after adjusting for the

manufacturing overhead variance. (2 marks)

(f) Determine the balance in Work in Process Inventory on April 30 (3 m