Question

Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company's inventory balances were as follows: Raw materials Work in process Finished goods $ 63,000 $ 22,200 $ 52,500 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 $11.50 per direct labor-hour was based on a cost formula that estimated $460,000 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, $618,000. b. Raw materials use in production, $569,400. All of of the raw materials were used as direct materials. c. The following costs were accrued for employee services: direct labor, $410,000; indirect labor, $150,000; selling and administrative salaries, $338,000. d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $382,000. e. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $310,000. f. 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 $1,372,600 to manufacture according to their job cost sheets were completed during the year. h. Jobs were sold on account to customers during the year for a total of $3,202,500. The jobs cost $1,382,600 to manufacture according to their job cost sheets.

Answer 1

Journal entry

No	General Journal	Debit	credit
	Finished goods	1372600
	Work in process		1372600
	(To record goods completed)

7) Ending work in process

Beg WIP	22200	Finished goods	1372600
Direct material used	569400
Direct labor	410000
Manufacturing overhead	471500
End WIP	100500

8) Actual manufacturing overhead = 150000+310000 = 460000

9) Over applied overhead = 471500-460000 = 11500