Pasifika Steel provides customized steel works and uses a job-order costing system. In allocating overhead, it uses a predetermined overhead rate based on machine hours.

In January 2020, Pasifika Steel estimated manufacturing overhead for the year would be $135,000 and 9,000 machine hours would be used.

The following information pertains to December 2020:

Job No. 280

Job No. 281

Job No. 282

Total

Work in process, December 1

$8,000

$13,000

$19,000

$40,000

December production activity:

Materials requisitioned

$2,000

$2,400

$3,600

$8,000

Direct labor costs

$1,200

$1,800

$2,000

$5,000

Machine hours

400

700

900

2,000

Actual manufacturing overhead costs incurred in December were $31,000

REQUIRED

Show ALL necessary workings

1.Compute the predetermined overhead application rate. (Label the OH rate correctly)(2 marks)

2.Determine the total cost associated with each job.(6 marks)

3.Prepare journal entries for the following (narrations are not required):

(i)Materials requisitioned(1.5 marks)

(ii)Direct labour costs incurred(1.5 marks)

(iii)MOH cost applied(2 marks)

(iv) The completion of the three jobs(2 marks)