Question

5. What is the total manufacturing cost added to Work in Process during the year?

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 $ 79,000 $ 25,600 $ 37,200 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 $12.25 per direct labor-hour was based on a cost formula that estimated $490,000 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, $660,000. All of of the raw materials were used as direct materials. c. The following costs were accrued for employee services: direct labor, $440,000; indirect labor, $150,000; selling and administrative salaries, $260,000. d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $462,000. e. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $340,000. 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 $1,542,950 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 $3,172,500. The jobs cost $1,552,950 to manufacture according to their job cost sheets.

6. What is the journal entry to record the transfer of completed jobs that is referred to in item g above?

7. What is the ending balance in Work in Process?

8. What is the total amount of actual manufacturing overhead cost incurred during the year?

Answer 1

5. Total manufacturing cost

Direct materials	$660,000
Direct labor	$440,000
Overhead	$502,250
Total manufacturing cost	$1,602,250

6. Journal entry

Finished goods inventory	$1,542,950
Work in process Inventory		$1,542,950

7.

Work in process

Beh bal	$25,600	$1,542,950	g
b	$660,000
c	$440,000
f	$502,250
End bal	$84,900

8.

Total manufacturing overhead cost

Indirect labor	$150,000
Various manufacturing costs	$340,000
Total manufacturing overhead	$490,000