Voltus Communications, a manufacturer of communications equipment, uses a job costing system. Manufacturing overhead is applied based on machine hours and it uses a predetermined overhead rate with budgeted overhead of $3,600,000 for the year and 80,000 machine hours.

Voltus uses a financial year of 1 July 2018 to 30 June 2019 and all the activities for the year have been carried out. Summarised details for period 1 July 2018 to 31 May 2019 and for June 2019 follow. Jobs B12- 008,K12-009 and K12-011 were completed during June 2019 .All completed jobs except K12-009 have been sold by 30 June 2019.

Jobs in process at 31 May 2019
Job numbers Balance at 31 May 2019
B12-008 $263,000
K12-009 163,000
K12-011 0
L15-005 0
L15-006 0
Total 426,000

 

Work carried out during June 2019
Job numbers Direct material  Direct labour Machine hours
B12-008 $2,500 13,500 300
K12-009 14,000 36,000 1,000
K12-011 71,800 85,100 1,400
L15-005 118,700 55,000 2,500
L15-006 78,000 50,400 800
Totals $285,000 $240,000 6,000

 

Actual Manufacturing Overhead incurred 1July 2018 -31 May 2019 During June 2019
Indirect material $375,000 $27,000
Indirect labour 1,035,000 90,000
Utilities 735,000 66,000
Depreciation 1,155,000 105,000
Total overhead $3,300,000 288,000
Other information
1 July 2018 – 31 May 2019 During June 2019
Raw Material purchases * $2,895,000 $294,000
Direct labour cost 2,535,000 240,000
Machine hours 73,000 6,000

 

Account balances 1 July
Raw Material Inventory $315,000
Work in Process Inventory 180,000
Finished Goods Inventory 375,000
Account balance 30 June 2019 Raw Material Inventory $255,000

*Raw material purchases and raw material inventory consist of both direct and indirect materials

Required:

  1. Calculate the amount of manufacturing overhead Voltus would have applied to jobs for the period 1 July 2018 to 31 May 2019.
  2. Calculate the amount of manufacturing overhead Voltus would have applied to jobs during June 2019.
  3. Determine the amount by which manufacturing overhead is overapplied or underapplied at 30 June 2019.
  4. Determine the balance in the finished goods account at 30 June 2019.

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