Question

Voltus Communications, a manufacturer of communications equipment, uses a job costing system. Manufacturing overhead is applied...

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 cost of production of each jobs and make a General Ledger

Homework Answers

Answer #1
Cost of Jobs
B12-008 292500
K12-009 258000
K12-011 219900
L15-005 286200
L15-006 164400
(as per ledger below)
B12-008
Particulars Amount Particulars Amount
beg balance 263000 By finished goods 292500
Direct materials 2500
Direct labor 13500
Allocated overheads 13500
292500 292500
K12-009
Particulars Amount Particulars Amount
Beg balance 163000 Finished goods 258000
Direct materials 14000
Direct labor 36000
Allocated overheads 45000
258000 258000
K12-011
Particulars Amount Particulars Amount
Direct materials 71800 Finished goods 219900
Direct labor 85100
Allocated overheads 63000
219900 219900
L15-005
Particulars Amount Particulars Amount
Direct materials 118700 WIP 286200
Direct labor 55000
Allocated overheads 112500
286200 286200
L15-006
Particulars Amount Particulars Amount
Direct materials 78000 WIP 164400
Direct labor 50400
Allocated overheads 36000
164400 164400
Manufacturing overheads
Particulars Amount Particulars Amount
indirect material 27000 Allocated 270000
indirect labor 90000 COGS 12000
utilities 66000
depreciation 105000
288000 282000
Finished goods
Particulars Amount Particulars Amount
Beg balance 0 COGS 512400
B12-008 292500 Balance 258000
K12-009 258000
K12-011 219900
770400 770400
COGS
Particulars Amount Particulars Amount
Finished goods 512400 income statement 530400
manufacturing overheads 18000
530400 530400
WIP
Particulars Amount Particulars Amount
Beg balance 426000 Finished goods 770400
B12-008 29500 balance 450600
K12-009 95000
K12-011 219900
L15-005 286200
L15-006 164400
1221000 1221000
overhead rate =budgeted cost/budgeted hours
=3600000/80000
45
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