Starz Invitations & More does Customized, hand crafted memorabilia, in which each batch of items is a job. The company has a highly labour intensive production process, so it allocates manufacturing overhead based on direct labour hours.

Starz pre-determined overhead application rate for 20X8 was computed from the following data:

Total estimated factory overheads $2400000

Total estimated direct labour hours 40000

At the end of May 20X8,starz invitations &more reported the following inventories:

Dr Materials Inventory CR DR WIP Inventory CR DR Finished goods Inventory CR

Bal $208000

Bal $176000

Bal $95000

During June 20X8,Starz invitations & More actually used 3000 direct Labour hours and recorded the following transactions.

(I)	Purchased materials on account	$310000
(II)	Manufacturing wages incurred	$400000
(III)	Materials requisitioned (includes $30000 of indirect Materials)	$420000
(IV)	Assigned manufacturing wages,85% direct labour,15% indirect labour
(V)	Depreciation expense on factory equipment used on the different jobs	$95000
(VI)	Other manufacturing overhead incurred	$35000
(VII)	Allocated Manufacturing overhead for June 20X8
(VIII)	Costs of jobs completed	$995000
(VIII)	Cost of jobs sold(on account)at margin of 33 1/3% on sales	$960000

Required :

1. Compute Starzs Predetermined manufacturing overhead rate 20X8.

2. State the journal entries necessary to record the above Transactions in the general Journal. Assume that Starz uses the perpetual inventory system. Compute

3. 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.

4. What is the balance in the cost of goods sold account after the adjustment?

5. Compute Starzs Gross profit earned on the Jobs completed.

6. Open T-Accounts for Materials inventory, Work in progress inventory and Finished Goods inventory. Post the appropriate entries to these accounts & determine the ending account balances