The Foundational 15 LO31 LO32 LO33LO34 The following informa

The Foundational 15 [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 32,400 Finished goods 42,900 $ 61,500 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 $13.75 per direct labor-hour was based on a cost formula that estimated $550,000 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, $514,000. b. Raw materials use in production, $468,200. All of of the raw materials were used as direct materials. c. The following costs were accrued for employee services: direct labor, $500,000; indirect labor, $150,000; selling and administrative salaries, $309,000. d. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $449,000. e. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $400,000. . 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 $1,459,350 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 $2,985,000. The jobs cost $1,469,350 to manufacture according to their job cost sheets.

Solution

1) Transaction                    General Journal                                       Debit Credit b. Work in process inventory 468,200 Raw materials inventory 468,200 2) Ending balance in Raw Materials                                   Raw materials Beg.bal 61,500 a. 514,000 468,200 b. End bal 107,300 3) Transaction                    General Journal                                       Debit Credit c. Work in process inventory 500,000 Manufacturing overhead 150,000 Selling & administrative salaries 309,000 Factory wages payable 959,000 4) Manufacturing overhead applied ($13.75*41000DLH\'s) 563750 answer 5) Total manufacturing cost added during the year Direct materials 468,200 Direct labor 500,000 overhead applied 563,750 Total. 1,531,950 total manufacturing cost 1,531,950 answer 6) Transaction                    General Journal                                       Debit Credit g. Finished goods inventory 1,459,350 Work in process inventory 1,459,350 7)                       Work in process Beg.bal 32,400 1,459,350 g. b. 468,200            c. 500,000 f. 563,750 End bal 105,000 8) total actual manufacturing overhead cost 550,000 answer indirect labor 150000 Various manfuacturing cost 400000 total 550000 9) overapplied overhead 13,750 answer 10) Cost of goods available for sale 1502250 answer (1,459,350 +42900) 11) Transaction                    General Journal                                       Debit Credit h. cost of good sold 1,469,350 Finished goods inventory 1,469,350 12)                           Finished goods Finished Goods            Beg.bal 42,900 g. 1,459,350 1,469,350 h. End bal 32,900 13) Adjusted cost of goods sold 1,455,600 14) Gross margin 1,529,400 (sales - adjusted cost of goods sold) 15) Net operating income 771,400 answer Gross margin 1,529,400 less Selling & adm salaries -309,000 Various selling & adm -449,000 Net operating income 771,400