Ola Ltd, which uses a job costing system, had two jobs in process at the start of the year: Job L1 ($68,000) and Job L2 ($30 000). The following information is available:

i) ii)

The company applies manufacturing overhead on the basis of machine hours. Budgeted overhead and machine activity for the year were anticipated to be $1,000,000 and 25,000 hours, respectively.

The company worked on three jobs during the first quarter (i.e. from 1 January to 31 March). Direct materials used, direct labour incurred and machine hours consumed were as shown in the following table:

iii) iv)

Manufacturing overhead incurred during the first quarter was $215,000.

Ola Ltd completed Job L1 and Job L2 during the first quarter. Job L2 was sold on credit, producing a profit of $30,000 for the company.

Job numbers

L1 L2 L3

Direct material

$15,000 -

45,000

Direct labour

$30,000 33,000 65,000

Machine hours

900 1,600