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 $ 63,500 $ 32,000 $ 36,000 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 $13.00 per direct labor-hour was based on a cost formula that estimated $520,000 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, $584,000. b. Raw materials used in production, $537,600. All of of the raw materials were used as direct materials. c. The following costs were accrued for employee services: direct labor, $470,000; indirect labor, $150,000; selling and administrative salaries, $249,000. d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing). $464,000. e. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities). $370,000. 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 $1,478,700 to manufacture according to their job cost sheets were completed during this year. h. Jobs were sold on account to customers during the year for a total of $3,367,500. The jobs cost $1,488,700 to manufacture according to their job cost sheets.

Answer 1

1.

Transaction	General Journal	Debit	Credit
		$	$
b.	Work in Process	537,600
	Raw Materials		537,600

2.

Raw Materials
Beg. bal.	63,500	537,600	b.
a.	584,000
End. bal.	109,900

3.

Transaction	General Journal	Debit	Credit
		$	$
c.	Work in Process	470,000
	Manufacturing Overhead	150,000
	Salaries Expense	249,000
	Salaries and Wages Payable		869,000

4.

Manufacturing overhead applied

$ 533,000

Manufacturing overhead applied = Actual direct labor hours worked x Predetermined Overhead Rate = 41,000 direct labor hours x $ 13 = $ 533,000

5.

Total manufacturing cost

$ 1,540,600

Total manufacturing cost = Direct Materials + Direct Labor + Manufacturing Overhead Applied = $ 537,600 + $ 470,000 + $ 533,000 = $ 1,540,600

6.

Transaction	General Journal	Debit	Credit
		$	$
g.	Finished Goods	1,478,700
	Work in Process		1,478,700

7.

Work in Process
Beg. bal.	32,000	1,478,700	g.
b.	537,600
c.	470,000
f.	533,000
End. bal.	93,900

8.

Total actual manufacturing overhead cost

$ 520,000