Exquisite Furnishings 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. The company expects to incur $2,205,000 0f manufacturing overhead costs and estimated direct labour costs of $3,150,000 during 2017. At the end of December 2016, Exquisite reported work in process inventory (Job 501) of $93,000 The following events occurred during January 2017.

i) Purchased materials on account, $392,000

ii) Incurred manufacturing wages of $400,000

iii) Requisitioned direct materials and used direct labour in manufacturing Direct Materials Direct Labour Job 501 Job 502 Job 503 Job 504 $70,200 97,500 105,300 117,000 $61,200 115,600 78,200 85,000

iv) Issued indirect materials to production, $30,000

v) Charged indirect manufacturing wages to production, $60,000

vi) Other manufacturing overhead costs incurred on units 501 to 504 amounted to $134,000

vii)Allocated overheads to jobs at the predetermined rate

viii)Units completed: 501, 502 & 504

ix) Shipped/sold units 501 & 504 (billed customers at a mark-up of 50% on cost)

Question 1.

a)What is the balance in the Cost of Goods Sold account after the adjustment?

b)Compute Exquisites gross profit earned on the jobs, after adjusting for the manufacturing overhead variance

c) Determine the balance in Work in Process Inventory on January 31. (2 marks)