Novaland Designs Ltd is in the business of designing and manufacturing furniture according to customized orders. As such, Novaland Designs uses a normal job order costing system to determine their product cost. Designers are paid the hourly rate of $55. The skilled carpenters employed to assemble the furniture are paid $75 per hour. Machines and equipment are utilized to cut, trim and polish the materials used. Therefore, manufacturing overhead (MOH) is applied using the number of machine hours. For 202X, the company budgeted MOH to be $1,200,000 and estimated the number of machine hours required for production to be 3,000 hours. Novaland Designs policy is to close the over or under-applied MOH to Cost of Goods Sold at the end of each quarter.

The ledger balances for the company as at Nov 30, 202X are shown below. The balance in the work in process account comprises only of the amount paid to designers for Job #4.

Other information relating to Novaland Designs operations in Dec are detailed below:

a) Job #4 is an order from a new restaurant for 200 tables. Due to an unusual erroneous setting in the cutting machine, 2.5 more metres of wood was required per table than was planned. Initial design drawings required only 8.5 metres ofwood per table. This was not factored into the agreed upon price of $250,000. The job was fully completed and delivered in Dec.

b) Job #5 remains uncompleted at the end of Dec.

c) Job #3 is a batch of customized shelves for a book store. In late Dec, Novaland Designs was informed that the book store owner had gone bankrupt. There were various options available on how to deal with Job #3. This issue will be brought up for discussion at a meeting in Jan next year.

d) Administrative and selling expenses incurred in Dec is $30,200. The MOH incurred in Dec amounts to $84,800.

Required:

(i) Compute the product cost for Job #4.

(ii) Prepare Novaland Designs income statement for the quarter ended 31 Dec 201X.

(iii) Post journal entries relating only to the MOH account during Dec 201X.

Work in Process 750 Finished Goods (Job #3) 168,000 Cost of Goods Sold 287,500 Sales 420,000 MOH 135,000 120,000 Adminstrative & Selling Expenses 76,500 Two jobs were processed in Dec, 202X. The table below show records relating to resources utilized for processing the two jobs in Dec. Direct Material Costs Designer Hours Carpenter Hours Machine Hours Job #4 $99,000 120 60 200 Job #5 $25,000 70 20 55