Bags R Us manufactures back packs for schools. The business uses a perpetual inventory system and has a highly labour intensive production process, so it applies manufacturing overhead based on direct labour hours. Any overhead variance is closed out to Cost of Goods Sold. The business's pre determined overhead application rate for 2018 was computed from the following data: Total estimated factory overheads $4,200,000 Total estimated direct labour hours 35,000 During the first month of 2018, the business recorded the following transactions. 1) Purchased materials on account, $500,000 ii) Incurred manufacturing wages of $1,065,000 iii) Issued direct materials and used direct labour in manufacturing Direct Materials Direct Labour Direct Labour Hours Job 401 $100,000 $220,000 1,200 Job 402 81,000 190,000 1,000 Job 403 9 0,000 205,000 1,100 Job 404 1 50,000 290,250 1,800 iv) Issued indirect materials to production, $80,000 v) Charged indirect manufacturing wages to production, $159,750 vi) Depreciation expense on factory equipment used on the different jobs, $300,000 vii) Other overhead costs incurred on jobs 401 to 404 amounted to $112,750 viii)Applied factory overhead to the various jobs using the pre-determined factory overhead rate. ix) Finished Jobs 401 - 403 and transferred to the finished goods inventory account x) Shipped Job 401 and 402 and billed customers at a margin of 25% on cost. Required: a) Compute Bags R Us' predetermined manufacturing overhead rate. (1 mark) b) Calculate the total manufacturing cost for each job. (4 marks) c) Using the total figures, record the transactions in the general journal. (9 marks) d) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account and state the balance on the account before closing the account. Show the journal entries necessary to dispose of this variance. (3 marks) e) What is the balance in the Cost of Goods Sold account after the adjustment? (2 marks) f) Calculate the gross profit earned by Bags R Us for the month. (2 marks) g) Open T-accounts for Work in Process Inventory and Finished Goods Inventory. Post the appropriate entries to these accounts & determine the ending account balan es. Assume that the beginning balances were zero. (4 marks) Cheetah Accessories uses four departments to produce handles for kitchen cabinets: Forming requires mixing the raw materials, Moulding, Spraying and Drying. After leaving the Drying Department, the handles are packaged and sent to the Finished Goods warehouse for shipment to retail outlets. The following data relates to the Spraying Department for the month of June: During the month, 2,000 handles valued at $275 each were transferred from the Molding Department to the Spraying Department Other production costs incurred during the month are summarized as follows: Direct Materials Added $171,000 Direct Manufacturing Wages $425,600 Manufacturing Overhead $205,200 Process inspection occurs during the process and normally no losses are expected at this stage. However, during the month 200 handles were rejected at inspection. Rejected units from this department are sold as scrap at $400 each. These units had reached the following degree of completion: Transfer from Moulding Direct material added 80% Conversion costs During June, 1,400 handles were completed, packaged and transferred to Finished Goods. Work-in-progress at the end of June had reached the following degree of completion: Transfer from Moulding 100% Materials added 60% Conversion costs 50% 40% Transfer from Moulding 100% Direct material added 80% Conversion costs 50% During June, 1,400 handles were completed, packaged and transferred to Finished Goods. Work-in-progress at the end of June had reached the following degree of completion: Transfer from Moulding 100% Materials added 60% Conversion costs 40% Materials added and conversion costs are incurred uniformly throughout each process. There were no incomplete units in the Spraying Department at the beginning of the period. Required: (a) Compute the equivalent units and cost per equivalent units for direct materials (From Moulding & Direct materials added) and conversion costs. (10 marks) (b) Compute the: total cost of the handles completed and transferred out of the Drying Department cost of the unexpected losses cost of ending work in process inventory in the Spraying Department (3 marks) (c) Post all transactions to the Work in Process Inventory - Spraying Department T-account. What is the ending balance? (5 marks) (d) Prepare the journal entries for the use of total direct materials, direct labour incurred. manufacturing overhead applied and the cost of the units completed and transferred out to the Drying Process (5 marks) (e) Given that 25% of the unexpected losses were as a result of pilferage, calculate Chrome Accessories true loss for the Spraying Department. (2 marks)