Vaughn Company produces high-quality microscopes for education and health care u

Question

Vaughn Company produces high-quality microscopes for education and health care uses. The company uses a job order costing system. Because the microscopes’ optics require significant manual labor to ensure adherence to strict manufacturing specifications, the company applies overhead on the basis of direct labor hours. At the beginning of 2017, the company estimated its manufacturing overhead would be $1,960,000 and that employees would work a total of 98,000 direct labor hours. During March, the company worked on the following five jobs:
Job Beginning
Balance Direct Materials
added during
March Direct Labor
added during
March Direct Labor Hours
added during
March 134 $118,800 $3,000 $8,500 160 158 121,550 2,300 12,150 340 212 21,700 86,500 36,300 3,490 287 34,450 71,700 31,870 2,620 301 18,820 21,885 1,450 Total $296,500 $182,320 $110,705 8,060
Jobs 134 and 158 were started in January, Jobs 212 and 287 were started in February, and Job 301 was started in March. During March, workers completed Jobs 134, 158, and 212. Jobs 134 and 212 were delivered to customers during March.

Actual overhead for the month of March was $176,000. The manufacturing overhead account is disposed of annually, not monthly.

Explanation / Answer

Calculate finished goods inventory :

Overhead rate = 1960000/98000 = 20 per labour hour :

Job 158 Beginning work in process 121550 Direct material 2300 Direct labour 12150 Overhead applied (340*20) 6800 Total finished goods inventory at march 31 142800

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