Miller Company uses a perpetual inventory system and has a highly labour intensive production process, so it assigns manufacturing overhead based on direct labour cost.

Millers predetermined overhead application rate for 2018 was computed from the following data:

Total estimated factory overhead $1,232,500

Total estimated direct labour cost $850,000

The following activities took place in the work in process inventory during August:

WIP Inventory A/C August 1 Bal. 18,600

Direct Materials Used 136,625

Other transactions incurred:

Indirect material issued to production was $22,500

Total manufacturing labour incurred in April was $205,000, 70% of this amount represented direct labour.

Other manufacturing overhead costs incurred for April amounted to $151,600.

Two jobs were completed with total costs of $220,800 & $100,600 respectively. They were sold on account at a mark-up of 40% on cost.

Required:

i) Compute Millers predetermined manufacturing overhead rate for 2018.

ii) State the journal entries necessary to record the above transactions in the general journal:

a) For direct materials used in August

b) For indirect material issued to production in August

c) For total manufacturing labour incurred in August

d) To assign manufacturing labour to the appropriate accounts

e) For other manufacturing overhead incurred

f) For manufacturing overhead allocated for August

g) To move the completed jobs into finished goods inventory

h) To sell the two completed jobs on account

iii) Calculate the manufacturing overhead variance for Miller and state the journal entries necessary to dispose of the variance.

iv) What is balance on the Cost of Goods Sold account after the adjustment

v) Determine the balance in work in process inventory on August 31.