Elite Home Decor manufactures customized household furnishings. 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. Elite expects to incur $2,205,000 of manufacturing overhead costs and estimated direct labour costs of $3,150,000 during 2020.

At the end of December 2019, Elite reported work in process inventory (Job 551) of $93,000 The following events occurred during January - March 2020.

i) Purchased materials on account, $392,000 ii) Incurred manufacturing wages of $400,000

3. Requisitioned direct materials and used direct labour in manufacturing

Job 551 Job 552 Job 553 Job 554	Direct Materials	Direct Labour
	$70,200 97,500 105,300 117,000	$61,200 115,600 78,200 85,000

4. Issued indirect materials to production, $30,000
5. Charged indirect manufacturing wages to production, $60,000 vi) Depreciation of production machinery, $85,000 vii) Other manufacturing overhead costs incurred on units 551 to 554 amounted to $49,000 viii) Allocated overheads to jobs at the predetermined rate ix) Units completed: 551, 552 & 554

x) Sold units 551 & 554 (billed customers at a margin of 33% on sales)

Required:

1. Compute Elites predetermined manufacturing overhead rate for 2020.
2. Calculate the total manufacturing costs for each job.
3. Using the total figures, record the above transactions in the general journal.
4. Post the manufacturing overhead transactions to the Manufacturing Overhead T-account, clearly showing the balance before closing the account. State the journal entries necessary to dispose of the variance. Assume that the manufacturing overhead variance is immaterial.
5. (e) What is the balance in the Cost of Goods Sold account after the adjustment?

6. Compute Elites gross profit earned on the jobs sold, after adjusting for the manufacturing overhead variance
7. Post the appropriate entries to Work in Process Inventory account & determine the account balance on March 31, the end of the quarter.