PART $1$

$(25$ marks$)$

Carib Tings & More does hand$-$crafted memorabilia for the tourism industry, in which each batch of

items is a job. The company has a highly machine intensive production process, so it allocates

manufacturing overhead based on machine hours. Carib Tings & More pre$-$determined overhead

application rate for $2024$ was computed from the following data:

Total estimated factory overheads $$2,400,000$

Total estimated machine hours $,40,000$

At the end of May $2024,$ Carib Tings & More reported work in process inventory of $$176,000.$

During June $2024,$ Carib Tings & More actually used $3,000$ machine hours and recorded the

following transactions.

Required:

$($a$)$ Compute Carib's predetermined manufacturing overhead rate for $2024.,(2$ mark$)$

$($b$)$ State the journal entries necessary to record the above transactions in the general journal. Assume

that Carib uses the perpetual inventory system.

$(10\frac{1}{2}$ marks$)$

$($c$)$ Post the manufacturing overhead transactions to the Manufacturing Overhead T$-$account and state

the balance on the account before performing end of period closing entries. Show the journal

entries necessary to dispose of the variance.

$(3$ marks$)$

$($d$)$ What is the balance in the Cost of Goods Sold account after the adjustment? $(2$ marks$)$

$($e$)$ Compute Carib's gross profit earned on the jobs completed and sold, after adjusting for the

manufacturing overhead variance.

$(2$ marks$)$

$($f$)$ Post the appropriate entries to Work in Process Inventory Control account & determine the account

balance on June $30,$ the end of the month.

$(2\frac{1}{2}$ marks$)$

$($g$)$ State and explain three $(3)$ differences between a job costing system and a process costing

system.

$(3$ marks$)$