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|
|Work carried out during June 2019|
|Job numbers||Direct material||Direct labour||Machine hours|
|Actual Manufacturing Overhead incurred||1July 2018 -31 May 2019||During June 2019|
|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|
|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
- Calculate the amount of manufacturing overhead Voltus would have applied to jobs for the period 1 July 2018 to 31 May 2019.
- Calculate the amount of manufacturing overhead Voltus would have applied to jobs during June 2019.
- Determine the amount by which manufacturing overhead is overapplied or underapplied at 30 June 2019.
- Determine the balance in the finished goods account at 30 June 2019.
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