KG Company is a furniture manufacturing company based in Shanghai China. It receives different orders to produce customized products. It has two production departments, cutting and assembling, recently it has been asked to submit a bid on the production of 10,000 chairs. It is estimated that the cost of materials will be $40,000, and the cost of direct labor will be $20,000. Factory overhead is applied at $2.70 per direct labor hour in the cutting Department and at $3 per direct labour hour in the assembling Department. It is estimated that 500 direct labor hours will be required in cutting and 600 hours will be required in the assembling department. The company wishes a markup of 40% of its total production cost. Required: Determine the following: (1) Based upon the information provided, which costing system will suit KG Company? Justify your choice as well. (2) Estimated cost to produce. (3) Estimated prime cost. (4) Estimated conversion cost. (5) Prepare necessary journal entries for materials cost only