Question

Required information The Foundational 15 (Algo) (LO3-1, LO3-2, LO3-3, LO3-4) [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 $ 50,000 $ 30,800 $ 43,200 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 $12.00 per direct labor-hour was based on a cost formula that estimated $480,000 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, $696,000. b. Raw materials used in production, $655,400. All of of the raw materials were used as direct materials. c. The following costs were accrued for employee services: direct labor, $430,000; indirect labor, $150,000; selling and administrative salaries, $251,000. d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $411,000. e. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $330,000. 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 $1,521,800 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 $3,255,000. The jobs cost $1,531,800 to manufacture according to their job cost sheets.

Answer 1

5)	Total manufacturing cost added during the year
	Direct materials				655,400
	Direct labor				430,000
	overhead applied				492,000
	Total.				1,577,400
	total manufacturing cost				1,577,400	answer
6)	Transaction	General Journal					Debit	Credit
	g.	Finished goods inventory					1,521,800
		Work in process inventory						1,521,800
7)	Work in process
	Beg.bal	30,800	1,521,800	g.
	b.	655,400
	c.	430,000
	f.	492,000
	End bal	86,400
8)	total actual manufacturing overhead cost					480,000	answer
	indirect labor			150000
	Various manfuacturing cost			330,000
	total			480000
9)	overapplied overhead			12,000	answer
10)	Cost of goods available for sale				1,565,000	answer
	(43200+1,521,800)
11)	Transaction	General Journal					Debit	Credit
	h.	cost of good sold					1,531,800
		Finished goods inventory						1,531,800
12)	Finished goods	Finished Goods
	Beg.bal	43,200
	g.	1,521,800	1,531,800	h.
	End bal	33,200
13)	Adjusted cost of goods sold				1,519,800
	(1,531,800-12000)
14)	Gross margin				1,735,200
	(sales - adjusted cost of goods sold)
15)	Net operating income				1,073,200	answer
	Gross margin			1,735,200
	less
	Selling & adm salaries			-251,000
	Various selling & adm			-411,000
	Net operating income			1,073,200