Assignment #3 Product Costing PART I (22 marks) Jones Souvenirs Hut does customized, hand-crafted memorabilia for hotels, in which each batch of souvenirs is a job. 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. Joust's predetermined overhead rate for 2017 was computed from the following data: The WIP account given below relates to the activities of Jones Souvenirs for the month of April: WIP Inventory A/C $15,000 To Finished Goods 123,000 ? ? Total estimated factory overhead Total estimated direct labour cost Additional data: Aprili Bal. Direct Materials Used Direct Labour Incurred Manufacturing Overhead Applied (c) $2,400,000 $2,000,000 (d) (e) (f) Total material requisitioned. Manufacturing Labour Costs incurred. Other manufacturing overheads incurred Two jobs were completed with total costs of $183,000 and $105,000 respectively. They were sold to the hotel on account at a margin of 33 1/3% on sales. Required: (a) Compute Jones Souvenirs predetermined manufacturing overhead rate for 2017. (2 marks) (b) State the journal entries necessary to record the following transactions in the general journal. (i) Total materials issued to production (ii) Assign manufacturing labour to the appropriate accounts (iii) Other manufacturing overhead incurred (iv) Manufacturing overhead applied to production (v) Move completed jobs to finished goods (vi) Account for jobs completed and sold ? $153,000 $163,500 (75% represents direct labour) $94.275 (8 marks) Post the manufacturing overhead transactions to the Manufacturing Overhead T-account. What is the balance on the account before performing end of period closing entries? Is manufacturing overhead under- or over- absorbed? State the journal entries necessary to dispose of the variance. Assume that the manufacturing overhead variance is immaterial. (4 marks) What is the balance in the Cost of Goods Sold account after the adjustment? (2 marks) Compute Jones Souvenirs gross profit earned on the jobs, after adjusting for the manufacturing overhead variance. (2 marks) Determine the balance in Work in Process Inventory on April 30 (3 marks) "The only place you will ever find success before work is in the dictionary urid salmon Page 2