Monticello Company uses a perpetual inventory system and has ahighly labour intensive production process, so it assignsmanufacturing overhead based on direct labour cost. Monticello’spredetermined overhead application rate for 2017 was computed fromthe following data: Total estimated factory overhead $1,232,500Total estimated direct labour cost $850,000 The followingactivities took place in the work in process inventory during June:WIP Inventory A/C June 1 Bal. 25,625 Direct Materials Used 127,400Other transactions incurred: ? Indirect material issued toproduction was $19,000 ? Total manufacturing labour incurred inJune was $172,500, 80% of this amount represented direct labour. ?Other manufacturing overhead costs incurred for June amounted to$170,375. ? Two jobs were completed with total costs of $160,000& $105,000 respectively. They were sold on account at a mark-upof 75% on cost. Required: i) ii) Compute Monticello’s predeterminedmanufacturing overhead rate for 2017. State the journal entriesnecessary to record the above transactions in the general journal:For direct materials used in June For indirect material issued toproduction in June For total manufacturing labour incurred in JuneTo assign manufacturing labour to the appropriate accounts Forother manufacturing overhead incurred For manufacturing overheadapplied for June To move the completed jobs into finished goodsinventory To sell the two completed jobs on account Calculate themanufacturing overhead variance for Monticello and state thejournal entries necessary to dispose of the variance. What isbalance on the Cost of Goods Sold account after the adjustmentDetermine the balance in work in process inventory on June 30.
