MNC provides customized engineering services to large manufacturing companies and uses a job-order costing system. The system provided the following information:

MNC purchases materials as needed and consumes them during the accounting period. Therefore, it does not need to maintain a materials inventory account. The payroll amount includes salaries/wages paid to professional (direct) labour as well as indirect labour. Overhead is allocated to jobs using a predetermined overhead allocation rate based on professional labour costs computed at the beginning of the year. For 2016, MNC estimated its professional labour and overhead amounts to be $3.2 million and $768,000 respectively.

Required:
1.	Compute the predetermined overhead allocation rate for the year.

2.	Compute the following amounts for the month of July:

Transcribed Image Text:

Inventories: Jobs in process Information about July: Materials purchases Payroll Actual overhead incurred: Supplies Indirect labour Other overhead costs Selling & administration Sales June 30, 2016 July 31, 2016 $ 34,900 $ 53,000 76,500 1,487,400 9,200 258,800 82,800 975,200 $2,943,500 Predetermined overhead allocation rate % of direct labour cost a. Cost of jobs completed b. Gross profit c. Net income Inventories: Jobs in process Information about July: Materials purchases Payroll Actual overhead incurred: Supplies Indirect labour Other overhead costs Selling & administration Sales June 30, 2016 July 31, 2016 $ 34,900 $ 53,000 76,500 1,487,400 9,200 258,800 82,800 975,200 $2,943,500 Predetermined overhead allocation rate % of direct labour cost a. Cost of jobs completed b. Gross profit c. Net income

Answer rating: 100% (QA)

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