Bunnell Corporation is a manufacturer that uses job-order
Information:
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Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows:
Raw materials$63,500
Work in process$32,000
Finished goods$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:
Raw materials were purchased on account, $584,000.
Raw materials use in production, $537,600. All of of the raw materials were used as direct materials.
The following costs were accrued for employee services: direct labor, $470,000; indirect labor, $150,000; selling and administrative salaries, $249,000.
Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $464,000.
Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $370,000.
Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.
Jobs costing $1,478,700 to manufacture according to their job cost sheets were completed during the year.
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.
Additional Information I have calculated:
Ending Balance of Raw Material: 109,900
manufacturing overhead applied to production during the year: 533,000
Ending Balance of Work in Process: 93,900
manufacturing overhead over applied for the year by: 13,000
Ending Balance of Finished Goods: 26,000
Question:
1. What is the journal entry to record the transfer of completed jobs that is referred to in item g above?
Answer: Finished goods inventory $ 1,478,700
WIP inventory $ 1,478,700
2. What is the total manufacturing cost added to Work in Process during the year?
Direct materials used $ 537,600
Direct labor cost $ 470,000
Applied overhead: $13 per direct labor hour * 41000 $ 533,000
Total manufacturing costs $ 1,540,600
Total manufacturing costs added to WIP =$ 1,540,600
Total manufacturing overhead applied added to WIP =$ 533,000
3. What is the total amount of actual manufacturing overhead cost incurred during the year?
Indirect labor $ 150,000
Other man. Overhead costs $ 370,000
Total man. Overhead cost incurred $ 520,000
4. What is the cost of goods available for sale during the year?
Direct materials used $ 537,600
Direct labor cost $ 470,000
Applied overhead: $13 per direct labor hour * 41000 $ 533,000
Total manufacturing costs $ 1,540,600
Add: Beginning WIP inventory $32,000 $ 1,572,600
Less: Ending WIP inventory* $ (93,900)
Total cost of goods manufactured $ 1,478,700
Add: Beginning finished goods inventory $36,000
Cost of goods available for sale$ 1,514,700
5. What is the journal entry to record the cost of goods sold referred to in item h above?
Cost of goods sold $ 1,488,700
Finished goods inventory $ 1,488,700
6.Assuming that the company closes its underapplied or overapplied overhead to Cost of Goods Sold, what is the adjusted cost of goods sold for the year?
The overhead of $13000 is OVER-applied as the applied overhead
This overapplied overhead will be deducted from the cost of goods sold.
Cost of goods sold (before adjustment) $ 1,488,700
Less: Overhead over-applied $ (13,000)
Adjusted cost of goods sold $ 1,475,700
7. What is the gross margin for the year?
Sales revenue $ 3,367,500
Less: Adjusted cost of goods sold $ (1,475,700)
Gross margin$ 1,891,800
8. What is the net operating income for the year?
Gross margin$ 1,891,800
Less: Salaries expense$ 249,000
Selling & admin. Exp $ 464,000+ $ 713,000
Net operating income $ 1,178,800
Answered questions BC2530 Week 1 Assignment

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