PQR uses normal and job order costing. PQR had two jobs in process at the start of March: job number 22 ($6,800) and job number 23 ($10,800). PQR applies manufacturing overhead on the basis of machine hours (“MH”). The budgeted overhead and machine activity level for the year were anticipated to be $288,000 and 9,600 MH respectively. PQR worked on four jobs during March. The direct materials used, direct labour incurred, and machine hours consumed during
March were as shown in the table below:
Budgeted and actual direct labour rate is $8.00 and $9.00 per hour respectively. Manufacturing
overhead incurred for March are as follows: depreciation ($14,000), indirect labour ($13,000),
indirect materials used ($9,000) and other factory expenses ($25,700). PQR paid cash for all
overhead expenses. Manufacturing overhead variance is closed on a monthly basis by proration to
work in process, finished goods and cost of goods sold. During March, PQR completed job
numbers, 22, 23 and 24. Job number 23 was sold on credit for a gross profit of $9,000.
Required:
(a) Compute PQR’s predetermined overhead rate.
(b) Prepare journal entries (to describe the flow of production-related costs) for March to record
the following:
(i) Manufacturing overhead incurred.
(ii) Application of manufacturing overhead to production.
(iii) Completion of Job number 22, 23 and 24.
(c) Compute the costs of jobs still in production and costs in finished goods inventory at the end
of March.
(d) Determine the under/over-applied manufacturing overhead for March.

Job number 2222 23 24 25 Direct materials $4,600 $7,200 $3,200 Direct labour $6,000 $9,000 $3,000 $3,000 Machine hours (MH) 480 280 800 200