Question 1 Super Designs Lid ("SDL") is in the business of designing and manufacturing tables with marble tops according to customized orders. SDL uses a normal job order costing system to determine their product cost. Designers are paid an hourly rate of $200. The skilled carpenters employed to assemble the furniture are paid $65 per hour. Machines and equipment are utilized to cut, trim and polish marble and other materials used. Manufacturing overhead ("MOH") is applied using machine hours. For 202X, SDL budgeted $540,000 for MOH and estimated the number of machine hours required for production to be 5,000 hours per month. SDL closes MOH variance to Cost of Goods Sold (COGS) at the end of each calendar year. On Nov 30, 202X work in process (WIP) account had a debit balance of $46,700. This comprises of an amount paid to designers for Job #1026 ($2,400) and the remainder for work done on Job #1025 in Nov 202X. In Dec 202X, SDL started Job #1027 and #1028. Material cost and various time incurred during Dec 202X are given below. Job Number of Direct Direct tables labour hours Designer Machine number material (DLH hours (DH) hours (MH) 1025 12 $0 40 0 0 1026 6 $18,000 240 0 1,700 1027 28 $44,000 672 25 2,300 1028 24 $44,400 144 16 300 Job #1025 and #1027 were completed in Dec, 202X. Other information relating to SDL's operations in Dec 202X are detailed below:(1} 1 ob #102? is an order from a new boutique hotel for 28 tables. Due to human error dlu'ing the cutting process more spoilage of marble was incurred than normally. This resulted in 10% higher material cost than normal. This extra cost is included in Dec 202K material cost for Job #1027. The agreed upon price for Job #102? was $186000. The job was completed and delivered in Dec 202K. (2) Job #1026 and #1028 remain uncompleted at the end ofDec 202x. (3} Job #1025 has not been delivered to the customer at the end of Dec 202K. (4) MOH incurred for the year ended 31 Dec 202X amounted to $540,000. Applied MOH up till 30 Nov 202X was $485,100.Question 1a Apply job order costing to compute normal product cost and gross prot for Job #1027. Question 1b Calculate MOH variance for the year ended 31 Dec 202K and state if it is over or under applied. Prepare journal entries to record transfer of cost to nished goods inventory and COGS for the month of Dec 202K. What is the balance in WIP account at the end of Dec 202K? Question 1c The CFO is concerned that closing MOH variance to COGS may cause fluctuations in net profit over different accounting periods. Briefly explain if she is correct. Suggest one (1} way to minimize the impact on profit