Question 3 Craftsman manufactures customized household furnishings. The company uses a perpetual inventory system and has a highly labour intensive production process so it assigns manufacturing overhead based on direct labour cost. Craftsman predetermined overhead application rate for 2012 was computed from the following Total estimated factory overhead $48o,ooo Total estimated direct labour cost $8oo,ooo The following events occurred during May 2012. i) Purchased materials on account, $405,000 ii) Incurred manufacturing wages of $111,60o iii) Requisitioned direct materials and used direct labour in manufacturing Direct Labour Direct Materials Job 101 14,800 41,320 Job 102 56,800 28,700 Job 103 62,100 19,200 Job 104 66,000 21,000 iv) Issued indirect materials to production, $6,60o v) Charged indirect manufacturing wages to production, $27,9oo vi) other manufacturing overhead costs incurred on units 101 to 104 amounted to $29,800 vii) Allocated overheads to jobs at the predetermined rate viii) Units completed: 101, 103 & 104 ix) Sold units 101 & 104 (billed customers at a mark-up of 45% on cost)