Question

Required information [The following information applies to the questions displayed below.) 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 $ 74,000 $ 31,800 $ 52,200 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 $14.50 per direct labor-hour was based on a cost formula that estimated $580,000 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, $690,000. b. Raw materials used in production, $641,800. All of of the raw materials were used as direct materials. c. The following costs were accrued for employee services: direct labor, $530,000; indirect labor, $150,000; selling and administrative salaries, $308,000. d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $457,000. e. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $430,000. 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 $1,703,300 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 $3,510,000. The jobs cost $1,713,300 to manufacture according to their job cost sheets.

Answer 1

1.

Journal entry

Work in process	$641,800
Raw materials		$641,800

3.

Work in process	$530,000
Manufacturing overhead	$150,000
Selling and administrative	$308,000
Wages payable		$988,000

4. Manufacturing overhead applied = Actual Direct labor hours × Predetermined overhead

=41,000×$14.50

=$594,500

5. Total manufacturing costs = Direct materials+ Indirect labor + Manufacturing overhead applied

=$641,800+$530,000+$594,500

=$1,766,300

6.

Finished goods	$1,703,300
Work in process		$1,703,300

8.

Total actual manufacturing overhead cost = Indirect Labor+ Depreciation

=$150,000+$430,000

=$580,000

9. Manufacturing overhead

Actual =$580,000

Applied =$594,500

Underapplied=$14,500

11.

Cost of goods sold	$1,713,300
Finished goods		$1,713,300