Task details: Optic Vision Pty Ltd, a manufacturer of fibre-optic communications equipment, uses a job costing system. Since the production process is heavily automated, manufacturing overhead is applied on the basis of machine hours using a predetermined overhead rate. Estimated manufacturing overhead costs of $3 600 000 and an estimated cost driver level of 80 000 machine hours. Operations for the current year have been completed, and all the accounting entries have been made for the year except the application of manufacturing overhead to the jobs worked on during December, the transfer of costs from work in process to finished goods for the jobs completed in December, and the transfer of costs from finished goods to cost of goods sold for the jobs that have been sold during December Summarised data as at 30 November, and for December, are presented in the following tables. Job numbers T11-007, N11-013 and N11-015 were completed during December. All completed jobs except job number N11-013 had been turned over to customers by the close of business on 31 December. Job numbers Machine hours T11-007 NI1-013 NI1-015 D12-002 DI2-003 Totals Work in process: December activity Balance 30 November Direct material $261000 $ 4500 165000 12000 0 76800 0 113700 0 78000 $426000 $285000 Direct labour $ 13500 36000 80 100 60000 50400 $240000 300 1000 1400 2 500 800 6000 Operating activity Activity to 30 November December activity Actual manufacturing overhead incurred: Indirect material $ 375000 $ 27000 Indirect labour 1035000 90000 Utilities 735000 66000 Depreciation 1 155000 105000 Total overhead $3300000 $288000 Other items: Raw material purchases $2895000 $294000 Direct labour cost $2 535000 $240000 Machine hours 73000 6000 Account balances at beginning 1 January Raw material inventory* $ 315000 Work in process inventory 180000 Finished goods inventory 375000 *Raw material purchases and raw material inventory consist of both direct and indirect materials. The balance of the raw material inventory account as at 31 December is $255 000 Required: 1. Calculate manufacturing overhead rate per machine hour. 2. How much manufacturing overhead would Optic Vision have applied to jobs to 30 November? 3. How much manufacturing overhead would be applied to jobs by Optic Vision during December? 4. Determine the amount by which the manufacturing overhead is overapplied or underapplied as at 31 December. 5. Determine the balance in Optic Vision's finished goods inventory account on 31 December. 6. Prepare a schedule of cost of goods manufactured for Optic Vision for the year. (Hint: In calculating the cost of direct material used, remember that Optic Vision includes both direct and indirect material in its raw material inventory account). 7. How much are total cost of completed jobs T11-007, N11-013 and N11-015? 8. Management accountant of Optic Vision, Sam has noticed that some competitors have adopted ABC method for manufacturing overhead cost. Sam believes Optic Vision should also change its costing method. Provide support for Sam's proposed change