Custom Couches uses a job costing system to manufacture couches for customers. Manufacturing overheads are allocated based on direct labor hours, with a budget of R108,000 for 160 hours in November 2022. Any under- or over-absorbed overheads are recorded in cost of sales. In November 2022, Job Z was started and ongoing, Job Y was completed, and Job X was invoiced at a 30% profit of cost. Raw materials of R75,000 were purchased on credit and issued to Jobs Y and Z. Other costs included rent, depreciation, and selling/administration.

1. Custom Couches (Pty) Ltd uses a job costing system to manufacture various types of couches for
their customers. Manufacturing overheads are allocated to jobs on the basis of a predetermined
rate i.e., it is based on direct labour hours. The budgeted manufacturing overheads for the period
(November 2022) were R108 000 and the anticipated direct labour hours for the same period
were estimated to be 160 hours. The organisation records under- or over-absorbed overheads in
the cost of sales account. On 1 November 2022, the general ledger of the company indicated the
following: The following occurred during the month of November 2022: - Job Z was started
during the month and is still in progress at the end of the month. - Job Y was completed during
the month (Job Y was still in progress at the beginning of the month). - Job X was invoiced to a
customer at a profit of 30% of the cost. - Raw material purchases amounted to R75 000 and were
all purchased on credit. - Raw materials were issued as follows: - Job Y: R20 000 - Job Z: R40
000 - Indirect raw material was R7 000 - Labour costs were as follows: - Direct labour on Job Y
(36 hours): R3 600 - Direct labour on Job Z (120 hours): R11 400 - Indirect labour: R5 500 -
Other costs incurred during the month: - Rent of the factory premises: R50 000 - Depreciation of
manufacturing machines: R44 000 - Selling and administration costs: R13 000