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:

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.

Calculate the total cost for each of the five jobs as of March 31.

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

Explanation / Answer

Calculate the total manufacturing cost for March.

Job 134 158 212 287 301 Total Direct material 3000 2300 86500 71700 18820 182320 Direct labour 8500 12150 36300 31870 21885 110705 Overhead applied 3200 6800 69800 52400 29000 161200 Total Manufacturing cost 14700 21250 192600 155970 69705 454225 Beginning work in process 118800 121550 21700 34450 296500 Total cost 133500 142800 214300 190420 69705 750725

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