Question

Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows:

Raw materials	$	72,500
Work in process	$	18,200
Finished goods	$	46,500

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 $15.50 per direct labor-hour was based on a cost formula that estimated $620,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:

1. Raw materials were purchased on account, $628,000.
2. Raw materials used in production, $598,000. All of of the raw materials were used as direct materials.
3. The following costs were accrued for employee services: direct labor, $570,000; indirect labor, $150,000; selling and administrative salaries, $266,000.
4. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $418,000.
5. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $470,000.
6. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.
7. Jobs costing $1,717,900 to manufacture according to their job cost sheets were completed during the year.
8. Jobs were sold on account to customers during the year for a total of $3,225,000. The jobs cost $1,727,900 to manufacture according to their job cost sheets.

Answer 1

Details Beginning Inventory Account payable Amount 598000 1025001 700500 Total Details Beginning Inventory Raw Material Direct labor Factory overheads 41000*15.50 Raw Material (RM) Amount Details 72500 Work in process 628000 Closing Inventory 700500 Total Work in process (WIP) Amount Details 18200 Finished goods 589000 Closing Inventory 570000 635500 1812700 Finished Goods Inventory Amount Details 46500 Cost of goods sold 1717900 Closing Inventory 1764400 Amount 17179001 94800 1812700 Details Beginning Inventory Work in process Amount 1727900 36500 1764400

Note. Jobs costing $1,717,900 to manufacture according to their job cost sheets were completed fromWIP

The Cost of finished sold is assumed as job to manufacture according to their job cost sheets 1727900

It is not clear, so the assumption

Amount 24119001 Cost of Goods sold Details Amount Details Finished goods 1727900 Sales Selling and Administrative Salaries 266000 Selling and Administrative expense 418000 2411900 2411900 Details Cost of goods sold Net income Sales Amount Details 2411900 Account receivable 813100 3225000 Amount 3225000 3225000

Note

Factory overhead overabsorbed Indirect labor 150000 Manufacturing Overhead Incurred 470000 Total Factory incurred 620000 Factory overhead applied 635500 Factory overhead overabsorbed 15500 This amount may be credited in cost of goods sold to find out the final net income So the net income will be more by 15500