Question

Home Tools Essentials of Corp... Managerial-Accou... X Sign In 2. Share A ♡ 6 0 Q 133 (186 of 817) A Tho 20% - e lurp At least one signature is invalid. Signature Panel Search "Header Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company's inventory balances were as follows: LO3-1, LO3- LO3-3, LO3 P. Export PDF Pe Create PDF Raw materials........... Work in process..................... Finished goods ........ .......... $40,000 $18,000 $35,000 Edit PDF 5 Comment Combine Files Organize Pages Redact 0 Protect The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company's predetermined overhead rate of $16.25 per direct labor-hour was based on a cost formula that estimated $650,000 of total manufacturing overhead for an estimated activity level of 40.000 direct labor-hours. The following transactions were recorded for the year: a. Raw materials were purchased on account. $510,000. b. Raw materials used in production, $480,000. All of of the raw materials were used as direct materials. c. The following costs were accrued for employee services: direct labor, S600,000; indirect labor, $150,000; selling and administrative salaries, $240,000. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $367,000. e. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $500,000. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year. g. Jobs costing $1,680,000 to manufacture according to their job cost sheets were completed dur- ing the year. h. Jobs were sold on account to customers during the year for a total of $2.800,000. The jobs cost $1,690,000 to manufacture according to their job cost sheets. Required: 1. What is the journal entry to record raw materials used in production? 2. What is the ending balance in Raw Materials? 3. What is the journal entry to record the labor costs incurred during the year? 9.00 x 10.68 in Optimize PDF Fill & Sign L. Send for Review Sign and send documents for e-signature Start Free Trial

Answer 1

1)	Transaction	General Journal					Debit	Credit
	b.	Work in process inventory					480,000
		Raw materials inventory						480,000
2)	Ending balance in Raw Materials
	Raw materials
	Beg.bal	40,000
	a.	510,000	480,000	b.
	End bal	70,000
3)	Transaction	General Journal					Debit	Credit
	c.	Work in process inventory					600,000
		Manufacturing overhead					150,000
		Selling & administrative salaries					240,000
		Factory wages payable						990,000
4)	Manufacturing overhead applied ($16.25*41,000 DLH's)						666250	answer
5)	Total manufacturing cost added during the year
	Direct materials				480,000
	Direct labor				600,000
	overhead applied				666,250
	Total.				1,746,250
	total manufacturing cost				1,746,250	answer
6)	Transaction	General Journal					Debit	Credit
	g.	Finished goods inventory					1,680,000
		Work in process inventory						1,680,000
7)	Work in process
	Beg.bal	18,000	1,680,000	g.
	b.	480,000
	c.	600,000
	f.	666,250
	End bal	84,250
8)	total actual manufacturing overhead cost					650,000	answer
	indirect labor			150000
	Various manfuacturing cost			500,000
	total			650000
9)	overapplied overhead			16,250	answer
10)	Cost of goods available for sale				1,715,000	answer
	(35000+1,680,000)
11)	Transaction	General Journal					Debit	Credit
	h.	cost of good sold					1,690,000
		Finished goods inventory						1,690,000
12)	Finished goods	Finished Goods
	Beg.bal	35,000
	g.	1,680,000	1,690,000	h.
	End bal	25,000
13)	Adjusted cost of goods sold				1,673,750
	(1,690,000-16,250)
14)	Gross margin				1,126,250
	(sales - adjusted cost of goods sold)
15)	Net operating income				519,250	answer
	Gross margin			1,126,250
	less
	Selling & adm salaries			-240,000
	Various selling & adm			-367,000
	Net operating income			519,250